The upcoming Union Budget 2023 is a pre-election one, with general elections slated for 2024. Usually, pre-election budgets tend to be populist, with schemes and policies targeted at pleasing the general public. However, start-up founders expect a different approach this time around.
Many believe the government will present a growth-focused spending plan, maintaining the impetus on investments in infrastructure development. Avinash G Singh, senior vice president of Aranca Investment Research, expects the sectors like urban infrastructure, healthcare, education and rural housing to benefit from the increased allocation of funds.
“We believe the Budget will have a special mention of India’s long-term roadmap toward achieving its targeted renewables capacity and potential tax benefits awarded to the industry. We also expect the Union Budget to focus on investments in the use of technology in the form of artificial intelligence, machine learning and the internet of things (IoT),” he predicted.
Continuous Efforts Needed
The pandemic tested the Indian healthcare system to its limit and while Covid is in the rearview for now, the healthcare sector should remain an area of importance in the Budget. This includes introducing measures to establish a nationwide universal healthcare ecosystem for dealing with similar scenarios more quickly in the future.
The government has undertaken various initiatives to improve the country’s healthcare infrastructure during the previous year. However, continued efforts and an increase in the Budget towards improving the medical infrastructure are still needed, with a focus on improving public health and making affordable healthcare available, especially in tier 2 and 3 cities.
The out-of-pocket expenses of people dealing with chronic conditions like diabetes are still high, raising concerns about the accessibility and affordability of medical care. The widespread adoption of smartphones, improved mobile connectivity and smart healthcare initiatives like telemedicine and e-health are viable solutions for resolving problems of access and affordability.
Gautam Chopra, co-founder and CEO of BeatO, a diabetes care platform, opined that the government should encourage the growth of e-health solutions and public-private collaborations to find sustainable solutions to alleviate the growing burden on our healthcare ecosystem.
“With a major chunk of medical devices in the market being imported, and customs duties and taxes being very high on those, encouraging the production of medical devices within India as part of our Aatmanirbhar Bharat initiative would help drive innovation and affordability,” he added.
Lack of adequate infrastructure and funding directly impacts the effectiveness of healthtech start-ups in delivering services. These entities also need help accessing venture capital and other sources of funding. This is mainly due to the need for more awareness about the sector and its perceived high risk.
Vishal Gondal, founder and CEO at healthtech GOQii, noted that last year’s Budget did help the sector in some specific ways. The government proposed providing up to Rs 2,000 crore as venture capital to create an ecosystem for healthtech start-ups to help them access capital and develop innovative products and services.
“Additionally, the government also proposed to set up a ‘Digital Health Authority’, which will provide a regulatory framework for the sector. This will help reduce the regulatory burden on healthtech start-ups and enable them to launch products faster,” Gondal added. High regulatory barriers create hurdles for start-ups in terms of gaining approvals and launching products.
Tax Sops And Credits
Most healthcare tech start-ups need help with working capital. Gondal elaborated, “The loan banks give them for working capital is at a very high-interest rate. Government could help by creating specific schemes with banks to provide working capital loans to these start-ups at lowered interest rates.”
Founders are hopeful that the government will offer tax credits to healthcare start-ups in the upcoming Budget to encourage investments in the industry. This could help them with grants and capital, especially for early-stage start-ups, and access to new technologies to develop innovative solutions. Creating a regulatory framework could provide healthcare start-ups with the flexibility to innovate and test new products without the burden of excessive regulation. This will help them develop products faster and with fewer hurdles.
The government could also invest in developing the venture capital ecosystem in India by providing funding for venture capital firms and supporting the growth of angel investor networks. It could promote using alternative financing options, such as crowdfunding and peer-to-peer lending, to help health tech start-ups access capital.
To reduce the time taken to receive funding, the administration should consider streamlining the process through which grants and other forms of funding can be availed. Moreover, it could contemplate implementing policies that encourage the distribution of capital across the health tech sector, such as reserving a certain percentage of the financing for start-ups working on innovative solutions in underserved areas or targeting specific health issues.