Budget 2022: Would it prove to be an immunity booster for Lifesciences sector?
Increased budgetary allocations, promoting universal healthcare, medical tourism and Digital health ecosystem, etc. could provide the Lifesciences sector with the required centre stage.
- Jan 30, 2022,
- Updated Feb 1, 2022 2:27 AM IST
Finance Minister Nirmala Sitharaman, in her maiden budget speech emphasised on the well-being and health of the society with the slogan - mazboot desh ke liye mazboot nagrik, thereby introducing the Vision of Ayushman Bharat.
Since then, the government has demonstrated a large focus on the wellbeing of the society by introducing policies around 'Make in India', increased budgetary allocations, promoting universal healthcare, medical tourism and Digital health ecosystem, etc. could provide the Lifesciences sector with the required centre stage.
Having said that, amid a rapidly changing demography and government initiatives, some gaps continue to remain in the ability of the sector to contribute significantly to the GDP of the country. The industry expects Budget 2022 to have a larger focus on the sector for augmenting growth and encouraging further investments.
Key expectations from Budget 2022 for the Lifesciences sector:
Enabling ecosystem for innovation and research
Innovation in the sector has a high lead time and is also heavily dependent on capital intensive R&D. In absence of any substantial tax incentive/ tax holiday/exemption for R&D activities, the government could explore various options to augment innovation in the sector vide Budget 2022 such as:
- Innovation Bonds - One of the attractive and innovative ways could be to notify Innovation Bonds similar to the existing NHAI and REC bonds which enjoy a tax-free status.
- R&D Linked Incentive - Introduction of R&D Linked Incentive Policy ('RLI') similar to the PLI scheme to boost innovation.
- Weighted deduction - Explore at providing a 200% weighted deduction for companies making investments for development of new drugs.
Also read: Budget 2022: Key indirect tax amendments industry seeks
Skilled Labour
- Incentivising skilled labour development for the health care sector akin to deduction granted for development projects under erstwhile section 35CCD.
- Allocation of funds to introduce medical education programmes to address shortage of skilled healthcare manpower in the country.
Customs related reforms
- Rollback of health cess on imported medical devices to lower the burden on end consumer.
- Post review of customs duty exemption notifications, there was weeding out of certain exemptions which had outlived its utility. Exemptions on levy of duty for import of pharmaceutical goods/lifesaving drugs should continue and should not be subject to rationalisation.
Others
- Policies to boost manufacturing of medical devices in India
- Extend sunset clause for concessional tax regime for manufacturing units
(The author is Tax Director, Lifesciences practice, EY India.)
(Dipesh Chauhan, Senior Tax Professional, EY also contributed to the article)
(Views expressed are personal)
Also read: Will Budget 2022 be welcomed by millennials?
Finance Minister Nirmala Sitharaman, in her maiden budget speech emphasised on the well-being and health of the society with the slogan - mazboot desh ke liye mazboot nagrik, thereby introducing the Vision of Ayushman Bharat.
Since then, the government has demonstrated a large focus on the wellbeing of the society by introducing policies around 'Make in India', increased budgetary allocations, promoting universal healthcare, medical tourism and Digital health ecosystem, etc. could provide the Lifesciences sector with the required centre stage.
Having said that, amid a rapidly changing demography and government initiatives, some gaps continue to remain in the ability of the sector to contribute significantly to the GDP of the country. The industry expects Budget 2022 to have a larger focus on the sector for augmenting growth and encouraging further investments.
Key expectations from Budget 2022 for the Lifesciences sector:
Enabling ecosystem for innovation and research
Innovation in the sector has a high lead time and is also heavily dependent on capital intensive R&D. In absence of any substantial tax incentive/ tax holiday/exemption for R&D activities, the government could explore various options to augment innovation in the sector vide Budget 2022 such as:
- Innovation Bonds - One of the attractive and innovative ways could be to notify Innovation Bonds similar to the existing NHAI and REC bonds which enjoy a tax-free status.
- R&D Linked Incentive - Introduction of R&D Linked Incentive Policy ('RLI') similar to the PLI scheme to boost innovation.
- Weighted deduction - Explore at providing a 200% weighted deduction for companies making investments for development of new drugs.
Also read: Budget 2022: Key indirect tax amendments industry seeks
Skilled Labour
- Incentivising skilled labour development for the health care sector akin to deduction granted for development projects under erstwhile section 35CCD.
- Allocation of funds to introduce medical education programmes to address shortage of skilled healthcare manpower in the country.
Customs related reforms
- Rollback of health cess on imported medical devices to lower the burden on end consumer.
- Post review of customs duty exemption notifications, there was weeding out of certain exemptions which had outlived its utility. Exemptions on levy of duty for import of pharmaceutical goods/lifesaving drugs should continue and should not be subject to rationalisation.
Others
- Policies to boost manufacturing of medical devices in India
- Extend sunset clause for concessional tax regime for manufacturing units
(The author is Tax Director, Lifesciences practice, EY India.)
(Dipesh Chauhan, Senior Tax Professional, EY also contributed to the article)
(Views expressed are personal)
Also read: Will Budget 2022 be welcomed by millennials?