As per the proposals made in the Union Budget 2011-12 recently by Finance Minister Pranab Mukherjee, a five per cent tax would be levied on services provided by hospitals with 25 or more beds providing central air conditioning facilities. This levy is aimed at high-end treatments and is also extended to diagnostic tests of all kinds. Though proposed hike is likely to have an effect on the inbound arrivals, there are different opinions on the proposal from the industry.
“There should have been prior intimidation by the government as implying such taxes will push private hospitals to increase their service charge by at least ten per cent in the metro and Tier I cities across India. The concept is well accepted by tourists from western countries and at such point when the segment is evolving we cannot expect medical tourists to look for other destinations such as Philippines and Bangkok as these nations have developed their medical facilities in past the few years. The inbound tourism industry will be affected by this move but to some extent there is still a huge difference in the service cost as compared to US and European countries,” said Dr Akil Z Khan, Chairman, Call Life Informatics.
As per the statistical data recorded by various sources in USA, India provides various health care services at 20 per cent of the US cost. The overall number of medical tourists visiting Asia is expected to grow by more than 20 per cent annually, creating an industry worth about USD four billion by 2012. Quite often the price for a medical procedure in Asia is only 20 to 30 per cent of that in the United States or United Kingdom, as per a Deloitte report. But, the levying of five per cent tax on private hospitals can directly affect the Indian inbound market for Medical Tourism, as well as make India a less competitive destination for the same. Furthermore it may help East Asian markets such as Malaysia, Singapore, Thailand among others to look forward to capture these tourists segment.
Subhash Verma, Vice President, Association of Domestic Tour Operators opined, “Medical Tourism is an upcoming segment in India and the government’s budget announcement will surely affect the segment. The imposing of tax will hamper the overall inbound tourism market and demotivate investors who are looking forward to venturing into the business. The Finance Minister should look into the matter and scrap the proposal as it is detrimental for the growth of Medical Tourism in India.”
Contradicting the point Kuldip Verma, Ex-Vice President, Corporate Marketing, India Tourism Development Corporation said, “Even though the concept of Medical Tourism is evolving at great pace in India and levying of such service tax by the government can affect business of the tourism industry, one should not mind paying it, as it is in the national interest of the country.”
By Padmini Prabhu and Imran Khan
TravelBizMonitor