Rethinking India’s Health Models from Tax Relief to True Reform

The GST Council’s most awaited and welcomed decision to reduce tax slabs is a historic step in terms of Ease of Doing Business at Scale. However, in healthcare, this change is more than structural. It is a chance to reset the way we think about delivery, access, and preventive care.

Keeping medical consultations, diagnostics, and essential treatments tax-free will ensure secure and affordable access to health for all. In a country like India, where out-of-pocket still dominates the spending, the assurance that basic healthcare remains affordable is critical. What excites me most is what this could mean for digital health. With the exemption of telemedicine, hospitals and start-ups now have the space to build data platforms that link AI-driven diagnostics and create continuity of care. It is not just about cheaper online consultations; it is about building the digital rails for the future of Indian healthcare.

Equally significant is the treatment of nutraceuticals and dietary supplements. Access to nutritional foods and supplements, protein powders, multivitamins, diabetic-friendly foods, and plant-based milks now comes under a uniform 5 percent slab, leading to savings of 7–13 percent for consumers. This is more than a price cut. It signals a shift from viewing supplements as “lifestyle products” to seeing them as everyday preventive nutrition. Thus, wellness will no longer be episodic; it can become a routine practice. What would you rather have? Stay well as many days in a year as possible? Or get sick once in a while and get treated for it? Prevention is always a better route.

The onus is also on the industry to invest in scientifically-based research, plain labeling, and consumer information campaigns that give credibility to the supplements to become an integral part of conventional health practice.

But affordability on its own will not fill the structural gaps of India. We cannot ignore the pressure on our manpower and infrastructure. The numbers are grim: only 1.7 nurses per 1,000 population, a doctor-to-patient ratio of 1:1,500, and a hospital bed ratio of 1.57 per 1,000 by 2025— significantly short of the targets set in the National Health Policy. The sector must invest some of the GST savings on training and skilling. Centres of Excellence in nursing and allied health could fill the gap at home and also make India an exporter of manpower abroad, since the supply is likely to double by the end of the decade.

There is also room for new business models. Simplified slabs and greater clarity make bundled wellness plans more accessible. A single subscription could give families access to diagnostics, dietary advice, and digital monitoring, with GST reforms making it more affordable. It brings prevention to the community, out of the hospitals and papers it has long been entangled in. A sandbox can make that a possibility, where companies can test these bundled offerings in regular settings as the regulators hone the regulations along the course. It is not a central reform by itself, but an effective utility to unlock faster innovation without the addition of more compliance burdens.

 Another test will be trust. Consumers have to see the payoff, not be told about it. Imagine the credibility that will get built if companies issued, once a year, a GST Savings Impact Report—showing how much relief reached the consumer and how much went into workforce development or supporting country infrastructure. It would build trust and show the industry to be a true partner in the health outcomes of the country.

India's health market has grown from US$110 billion in FY16 to an estimated US$638 billion by FY25. The trend is astounding, but growth at all costs is not enough. The actual benefit of GST reform shall be seen by the outcomes: lower incidence of lifestyle disease, better health indicators of the rural sector, and lower out-of-pocket spending by households. These are the parameters that matter.

 This is not just a tax reform; it is an opportunity to rethink delivery models, talent pipelines, and accountability frameworks.