The Ministry of Commerce and Industry is working with the Finance Ministry seeking to reinstate tax breaks for exporters on export earnings (a facility which had been withdrawn from April 1), and on sale proceeds from duty entitlement passbook scheme (DEPB) licences. The government has already reworked the exemption on taxing export realizations. Earlier, the five-year phase-out plan envisaged tax on 20 % of export earnings in the first year, rising 20 % each to 100 % by the end of five years.

According to the new formula, exporters have to pay 20 % tax in the first year, thirty in the second, fifty in the third, seventy in the fourth and 100 in the fifth. According to the present Income-Tax norms, exporters are required to pay taxes on their entire export earnings in 2004-05.

The development comes as a relief to many exporters who were complaining that margins were getting reduced by around 10 %. This is actually one in a series of changes being mooted by exporter associations. Such as the Reserve Bank of India’s intervention in the forex market to check the appreciation of the rupee, the opening of a dollar window from which banks could borrow dollars as and when approached by exporters for pre and post shipment credit in foreign exchange, as well as the reimbursement of high transaction costs by the government.

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According to a recent study by the Confederation of Indian Industry (CII) and McKinsey, medical tourism can generate $ 1-2 bn in additional revenue for up-market tertiary hospitals by 2012, and will account for 3-5 % of the total healthcare delivery market,. The study expects the total healthcare market to rise from the present $ 2.3 bn to $ 5.1-$ 7 bn by 2012. The treatment of dental problems or a bypass surgery in India costs a fraction of what it does in most developed countries such as the UK or US. Cardiac surgery in India costs a tenth of what it does in the US. At present, the market is limited to patients from the Middle East and South Asia. But, it can grow rapidly if the industry re-orients itself to attract foreign patients, the study said. It also mentions that India has 1.5 beds for every 1,000 people, while China, Brazil and Thailand have an average of 4.3 beds. Another point highlighted was the changing demographic patterns and disease profiles along with rising treatment costs that would result in healthcare spending more than doubling over the next 10 years.

Healthcare is expected to attract the largest share of private spending in 2012, rising to $ 3.47 bn from the current level of $ 1.53 bn. The study also indicates that this can rise by an additional $ 0.87 bn if health insurance cover is available to the rich and middle-class populace Public spending is expected to double from the present $ 3.7 bn if the government reaches its target spending level of 2 % of the GDP, up from 0.9 %.

The study points out that Indian healthcare is plagued by a lack of standardisation and accreditation, and highlights the need for information management expertise. For the growth of this nascent sector, the study has recommended that the government should be committed to building adequate health infrastructure, create speciality tourist packages to include medical treatment, and promote hospital accreditation and standardisation.