Budget 2024: Healthcare industry welcomes custom duty exemptions on cancer medicines & x-ray machine components

New Delhi: The Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman while presenting her budget in the parliament on July 23, 2024, announced full exemption of custom duties to three more medicines to provide relief to cancer patients.

Sitharaman also announced the government’s decision to provide the basic custom duties on x-ray tubes & flat panel detectors for use in medical x-ray machines under the Phased Manufacturing Programme, so as to synchronize them with domestic capacity addition.

In their reactions, the industry stakeholders have mostly welcomed the announcements.

Anjan Bose, Founding Secretary General, NATHEALTH said: “FM’s announcements point towards focus on growth, job creation, skilling, youth, MSMEs, digital infrastructure, green energy, fiscal prudence, incentivizing states…Abolition of Angel tax for all classes of investors should have growth-enabling impact on start-up ecosystem including that of Healthcare especially HealthTech segment…For Healthcare sector, there were positive announcements on import duty rationalization for some cancer medicines and medtech items like X-ray tube and flat panel detector…there were many asks from the sector like on Ayushman Bharat pricing, GST rationalization, overall budget allocation for Healthcare sector etc…so we have to wait for the details with the fine prints to come out.”

“The budget announcement demonstrates the Government’s commitment to enhancing the healthcare system through a holistic approach. The change in the Basic Customs Duty (BCD) for X-ray tubes and flat panel detectors under the phased manufacturing program is a great strategic move. This will reduce costs and give a boost to domestic manufacturing capacity of India. Further, announcement of exemption of customs duties on three cancer medications is a notable step in improving treatment accessibility and affordability for a major health challenge. This move shows the Government’s dedication to addressing the cancer burden and alleviating patient financial stress,” said Dr Sangita Reddy, Joint Managing Director, Apollo Hospitals Group.

“In the interim budget the government allocated ₹90,171 crore for the health sector, this investment was crucial for developing sustainable healthcare strategies across India. Additionally, the budget had already announced health coverage for individuals over 70 up to ₹5 lakhs and an innovation fund, which are critical for advancing healthcare. These moves have helped the healthcare sector to strengthen infrastructure,” added Dr Reddy.

Tetsuya Yamada, MD, OMRON Healthcare India commended the healthcare initiatives outlined in the Union Budget. “The increased allocation for health and wellness, coupled with a strong emphasis on digital health infrastructure & telemedicine, is a significant step towards boosting accessibility and efficiency of healthcare services through digital means. The proposed budget’s support for innovations in healthcare aligns perfectly with our commitment to provide easily accessible and user-friendly health monitoring solutions. We believe that these measures will not only improve the quality of healthcare but also foster a culture of proactive health management among citizens. We look forward to contributing to this transformative journey and supporting the government’s vision of a healthier, more resilient India.”

In his reaction, Ganesh P Sabat, CEO – Sahajanand Medical Technologies Ltd & Co-Chair FICCI Medical Devices Committee said: “From the MedTech industry, while we go through the final nuances and allocations in the budget document, however the focus on cancer care drugs, puts back to flash the need for India to do more towards Non-Communicable Diseases (NCDs) especially when it comes to areas like cardiac care where India is inching to become the disease capital globally. This will not only motivate us to sustain innovation but will also attract more investments in research and development of newer product therapies ensuring patient safety, better outcomes and give a boost to the Made-in-India for the World as we set our goals towards ‘Viksit Bharat’ 2047.”

Gaurav Agarwal, Co-Chair, Medical Devices Committee, PHDCCI & MD, Innvolution Healthcare commented: “The Interim Budget 2024 is a game-changer for the Medtech industry, with the government’s decision to reduce customs duties on X-ray tubes and flat panel detectors, components not currently manufactured in India. This strategic move will lower costs for healthcare providers, making advanced medical imaging technologies more accessible and affordable. Additionally, the budget’s focus on skill development and R&D funding will help cultivate a highly skilled workforce and foster innovation, positioning India as a global leader in the manufacturing of novel technologies. These initiatives reflect the government’s commitment to transforming India into a hub of manufacturing excellence and ensuring the best healthcare outcomes for all.”

Dr GSK Velu, Chairman & Managing Director, Trivitron Healthcare, Neuberg Diagnostics, Maxivision Super Speciality Eye Hospitals said: “A notable highlight for the medical device industry is the reduction in duty on the import of components for X-ray equipment until domestic production capabilities are established. This move is anticipated to encourage investment in making India a global manufacturing hub. The budget highlighted the fiscal incentives for research and development (R&D) and capital expenditure (CAPEX) in the medical devices sector under the budget. These measures set innovation, enhance production capabilities, and propel India towards self-reliance in medical technology. The budget addresses import dependence in the medical device sector by introducing a health cess on customs duty for remaining medical devices. This aims to fund Ayushman Bharat and ensure quality, affordable healthcare.”

Dr Harsh Mahajan, Founder & Chairman, Mahajan Imaging & Labs and Chairman FICCI Health Services Committee, said, ”This is a budget of continuity and for inclusive growth. Exemption of three life saving medicines for cancer treatment is a welcome step.  Exemption of customs duty on components of Xray tubes and digital detectors, will lead to spurring of indigenous manufacturing of digital Xray machines in India.
Allocation of funds for innovation and skilling will also help those who are working in the healthcare sector.”

Sandeep Verma, Country Head for India, Bangladesh, and Sri Lanka at Bayer Consumer Health Division, said, “The Union Budget 2024-25 has prioritized four key segments of the population: the poor, women, youth, and farmers. These are also the cohorts which require the most focus vis-a-vis access to healthcare. With increased funding for health, the government’s ongoing commitment to improving access and innovation in the sector is commendable. A significant challenge for the healthcare and consumer industries, especially in rural areas, has been stagnant consumption. This year’s budget positively emphasizes sectors like agriculture & employment and is also driven to reduce inflation. This is expected to significantly boost consumption overall and more so in rural and semi urban areas.”

Dr Praveen Gupta, Principal Director and Chief of Neurology, Fortis Hospital said, “The exemption of custom duties on three cancer medicines and reduction of duties on certain medical technologies such as x-ray tubes and flat panel detectors is a significant move to strengthen domestic capabilities in the healthcare sector. Though, these measures are far less than expectations, however they will make advanced cancer treatments more affordable and accessible, addressing a critical need given the high cost of such treatments.  Additionally, priorities align with the broader goal of enhancing infrastructure investment and energy efficiency, creating a more conducive environment for improving healthcare delivery and outcomes in India.”

Sujay Shetty, Partner and Leader – Health Industries, PwC India said: “Overall, it is a favourable budget for the health and pharma industry, where the focus is on skill development, generating employment and strengthening the country’s infrastructure. This will augur well for the country as India advances towards becoming a global leader in supplying affordable drugs in a sustainable manner to the rest of the world. Relief provided for cancer patients is another welcome step given the increasing number of cancer cases in the country. Furthermore, the new tax regime will lead to higher disposable income which could lead to greater investment in health and wellbeing by the people of the country.”

Shamsher Dewan, Senior Vice President & Group Head – Corporate Ratings, ICRA Limited said: “Budgetary allocation towards healthcare increased by 13.0% for BE FY2025 BE from RE FY2024. Given the backdrop of under-penetrated healthcare infrastructure in the country, increased budgetary allocation towards the healthcare sector is a welcome move. Exemption on customs duty for three more cancer drugs will make the associated treatments more affordable, thus benefiting the patients and the healthcare ecosystem. Reduction/exemption in customs duty on raw materials used in medical devices and implants is expected to reduce costs for medical device manufacturers. ~7.4% increase in allocation towards the Ayushman Bharat scheme reaffirms the government’s focus on national health protection and is expected to increase patient footfalls for healthcare companies.”

D. S. Negi, CEO, Rajiv Gandhi Cancer Institute & Research Centre (RGCIRC) welcomed the government’s announcement in the Budget 2024-25 to fully exempt three additional cancer medicines from custom duties. “This is a significant step towards making essential cancer treatments more accessible and affordable for patients across India. The high cost of cancer medications has been a major barrier for many patients, and this exemption will undoubtedly provide much-needed financial relief to those battling the disease. Furthermore, the proposed reduction in the basic custom duty (BCD) on x-ray tubes and flat panel detectors for use in medical x-ray machines are commendable.”

Siddharth Daga, Managing Director, VINS Bioproducts Limited said, “With a 12.59% increase in fiscal spending on health, from ₹80,517 crores to ₹90,658 crores, the budget enhances manufacturing capabilities and reduces dependency on imports. Increased funding for research and development supports improved infrastructure and fosters the development of more effective treatments. For 2024–25, the healthcare sector was allocated ₹90,171 crore from the budget, marking a significant increase from the ₹79,221 crore allotted in 2023–24. The Department of Health and Family Welfare receives ₹87,656.90 crore, highlighting the government’s commitment to improving healthcare access and quality. Furthermore, ₹3,001.73 crore has been allocated to the Department of Health Research, underscoring the importance of advancing medical research and innovation.”