Private health care providers have sought infrastructure status and extension of existing tax sops in the coming Budget.
These demands of leading companies such as Apollo and Fortis Healthcare have been voiced through the Federation of Indian Chambers of Commerce and Industry (Ficci) and Confederation of Indian Industry (CII).
According to existing policy, a five-year tax holiday (till 2013) applies to hospitals which had been set up in small towns by April 2008. The industry wants this extended to all new hospitals coming up till 2013, irrespective of the area. It also wants this to be made available for the first 10 years.
“If India has to emerge as a low-cost health care tourist destination, there is a greater need to set up state of the art health care facilities in the metros, Tier-I and Tier-II cities of India. It is, therefore, necessary to extend the tax holiday benefit to hospitals set up beyond the rural areas, to enable companies to commit the substantial investments required in the health care sector,” CII said.
While infrastructure status will incentivise the investments made in new facilities, extension of tax benefits to all new hospitals in smaller towns is expected to attract large-scale investments in such towns.
In addition to extension of tax sops, Ficci wants the government to announce a special rate of depreciation of 25 and 50 per cent, respectively, on hospital buildings and medical equipment.
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Industry chambers want India to aim for two hospital beds for 1,000 people. “This would entail an additional 1.75 million beds, with an estimated investment of Rs 370,000 crore. The private health care providers will have to meet 80 percent of this investment,” Ficci said.
Today, around 70 percent of India’s health care expenditure is financed out of pocket, with only 12 per cent of India’s population covered by any health-related insurance schemes.
The industry also wanted the government to cover at least half the population by the year 2015, by making health insurance mandatory for the formal sector and government taking the responsibility of providing health cover for the poor.