Foreign Investment

India’s Healthcare Sector: Opportunities for Foreign Business

India’s Healthcare Sector is one of the largest sectors in the Indian economy. It has grown significantly in terms of employment and income. India’s Healthcare sector skyrocketed during the pandemic. The reasons for the new leap were account of developing business models, hybrid models, shifts in public health and policy, technological advancement and innovation. In the forthcoming years, India plans to increase its investment in digital healthcare technologies.

India’s healthcare sector primarily comprises hospitals, pharmaceuticals, clinical trials, medical equipment, outsourcing, telemedicine, health insurance and medical tourism. The reason behind the rapid growth in India’s Healthcare sector is due to a rise in investment in both public and private entities and improved services. Other reasons for the rise in demand in India’s healthcare sector are the population, growing instances of lifestyle diseases, rise in demand for affordable healthcare services due to increasing healthcare costs and government initiatives with tax benefits and incentives.

Government Initiatives in India’s Healthcare Sector

A few major initiatives taken by the Government of India to promote India’s Healthcare Sector are as follows:

1. Medical e-visa facility

To promote medical tourism in India, the government provides e-visa medical facilities to citizens of 156 countries.

• Human Resource for Health

Medical education is an important tool for reform. In this regard, the Central Government approved the opening of five new medical colleges and granted INR 190 crore for each in May 2022. The National Medical Commission Act^[1], 2019 which replaced the Medical Council of India, provides for a Medical Assessment and Rating Board (MARB) which will be responsible for rating institutions for the quality of education and training imparted.

• Ayushman Bharat Digital Mission

Prime Minister Narendra Modi launched this flagship initiative in September 2021. It aims to strengthen the health system from the grass root level. It is focused on building a next-generation primary healthcare system in promoting good health and early detection of diseases.

• PM-JAY

PM-JAY is an aspect of the Ayushman Bharat initiative. It is the world’s largest non-contributory Government-sponsored health insurance scheme. This scheme enables access to in-patient healthcare for poor and vulnerable families. This initiative also focuses on enhancing the performance of public facilities and using the potential of the private sector in providing healthcare to the poor. Under this scheme, 500 Million beneficiaries will be provided with up to INR 5,00,000 annual hospitalization cover per family.

• National Digital Health Mission (NDHM)

Under this initiative, the government aims to create a management mechanism for processing digital healthcare data and to facilitate seamless exchange of healthcare data. It will connect the digital health solutions of hospitals across the country. Under this mission, every citizen can get a digital health ID and their health record will be protected digitally. This initiative will make the healthcare system efficient, evidence-based and transparent.

• ‘Medicine from the Sky’ Project

This project was launched by the Telangana Government in association with World Economic Forum, NITI Aayog and HealthNet Global (Apollo Hospitals) in September 2021. This project paves the way for drone delivery of life-saving medicines in far-off regions of the country.

• Pradhan Mantri- Ayushman Bharat Health Infrastructure Mission (PM-ABHIM)

This mission aims to strengthen India’s health infrastructure. This mission also aims to work on the country’s primary, secondary and tertiary care services.

• National Medical & Wellness Tourism Board

This National Medical & Wellness Tourism Board was established by the Ministry of Tourism in July 2021. This Board shall work on promoting medical and wellness tourism in India.

• Allocation of funds by the government in this sector

The Ministry of Health and Family Welfare, the Central Government, has allocated USD 10.76 billion to promote India’s Healthcare sector in the Union Budget 2023-24. In addition to this, amounts have also been allocated under various schemes for promoting India’s healthcare sector.

Opportunities in India’s Healthcare Sector

1. Huge Market Size

India is a populous country with a large medical and healthcare sector. India’s Healthcare sector is expected to witness a three-fold rise and has experienced a compound annual growth rate of 22% between 2016-2022. The healthcare sector reached USD 372 in 2022. The huge market size comes with huge potential for growth in India’s Healthcare Sector.

• A huge number of highly qualified medical personnel in India

India has the largest pool of doctors and paramedics. The Doctors and paramedics undergo high-quality medical training received worldwide. India’s Healthcare Sector is one of the largest employers in India with a total of 4.7 million employees. This sector also generated additional jobs of over 5,00,000 per year between 2017-22.

• Competitive cost

Availing of medical facilities in India is cost-effective when compared to most of the major countries. The cost of surgery in India is one-tenth of that in the US or Western European countries. Among Asian and other Western countries, India enjoys an upper hand when it comes to cost competition. The low cost is one of the major reasons behind the rise in medical tourism. The low cost has also made India a major hub for R&D activities for international players.

• Growing demand for medical tourism

India is a premier and lucrative destination for foreign travelers coming to India to avail of the best clinical treatment. The healthcare system in India is one of the best, with complex surgical procedures being performed in high-end global hospitals by acclaimed medical specialists at a lower cost as compared to major countries. In the fiscal year 2021-22, India was ranked 10th out of 46 destinations in the world by the Medical Tourism Association on Medical Tourism Index (MTI). When it comes to wellness tourism, India was ranked 12^th out of the top 20, and when it comes to the wellness tourism market in Asia-Pacific, India ranked 5^th. The medical facilities available in India are at par with global standards. 

A present, the Indian Medical Value Travel market size is valued at USD 5-6 billion and is expected to rise to USD 13 billion by 2026. Indian hospitals are also switching to AI technologies for keeping records and providing treatment. In addition to this, India is also a favored destination for Yoga and Wellness. Traditional yoga and wellness therapies are provided through AYUSH.

• Digitization of India’s healthcare sector

The traditional way of healthcare delivery system is undergoing reform. The focus in the healthcare sector has now shifted to digitization. The pandemic led the healthcare sector to explore different models of delivering care. The zero contact healthcare gained momentum during the Covid pandemic. Zero-contact care focuses on reducing the number of touchpoints between the doctor and the patient without compromising on the quality of care. The zero-contact healthcare system will facilitate faster decision-making. Technological advancement in the healthcare sector will lead better to understanding of diseases in patients and consumers. This will ultimately lead to a demand for better quality healthcare services.

• Demographic, epidemiological and health conditions

In India, various diseases prevail depending upon the demographic and epidemiological conditions. Currently, India has nearly 60 million diabetics which is expected to increase in the future. A huge number of the population suffers from heart and lung diseases, cancer and diabetes. In addition to this, lifestyle disorders are increasing due to rising incomes, acceleration of urbanization and increased life expectancy. Contributing factors to this are increasing fat consumption and less physical activity leading to obesity cancer and cardiovascular diseases.

• Investment Opportunities

India is one of the fastest-growing economies receiving hefty FDI inflows. When it comes to India’s Health Sector, large FDIs are received in the pharmaceutical sector. There is a large scope of FDIs in medical devices and medical equipment. The Government of India allows 100% Foreign Direct Investment (FDI) in greenfield projects under the automatic route. However, FDI in brownfield projects is allowed up to 100% only through the government route. This makes foreign investors easily invest in India’s Healthcare sector. Further, the government of India has also taken several steps to promote ease of doing business in India. Most investments in the healthcare sector are received in the form of venture capital or private equity.

Conclusion

All-in-all, it can be said that India’s Healthcare Sector is opportunistic in every segment, making it fruitful for players in the medical device industry. The Indian government aims to make India a global healthcare hub. For this, the Indian government is taking numerous steps. The large population, along with the demographic and epidemiological conditions, will boost the healthcare services demand in the future. Further, technological advancement and digitization add awareness among the population about the medical healthcare infrastructure and facilities in India. For all these reasons, investing in India’s healthcare sector would be beneficial for a Foreign Business.

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