GST Has An Unexpected Casualty: The Medical Tourist From Abroad

The rising prices of hotel rooms on account of higher GST rates has an unlikely victim: medical tourism. India, which has gained a reputation for providing medical treatment at affordable prices, might be losing its charm, as overseas medical patients might be exploring options in other Asian economies. Mint has reported.

According to latest data available with the Union Tourism Ministry, there has been a decline in the number of medical tourists coming to India from some developing countries like Kenya, Nigeria, Afghanistan and Uzbekistan.

Medical tourism refers to people travelling to a country other than their own to obtain medical treatment. Though, until the turn of the new century, medical tourists were generally from less-developed countries travelling to developed economies for lack of quality healthcare in their home country. However, the situation has reversed and now, medical tourists travel in hoards to developing countries like India that provide high-quality treatment options at a fraction of the prices charged in their resident countries.

“One of the major reasons for the decline in medical tourists (to India) is the increase in goods and services tax (GST) on hotels in India, which is now around 28 per cent. Earlier, the tax rate used to hover at 18-19 per cent. In other countries, this percentage is far less. Now, this perception has set in that India has become costlier for medical treatment,” said Satyajeet Rajan, director-general, tourism, at the ministry. The officials pointed out that though hotel rooms that are priced below Rs. 7,500 attract a GST rate of 18 per cent, medical tourists prefer luxury hotels that attract a GST rate of 28 per cent.

However, it should be noted that there has not been a decrease in the influx of medical tourists coming from Bangladesh and USA, the top two source nations for India. Indian medical tourism is expected to grow to a $8 billion opportunity by 2020, from $4 billion currently. India has cornered nearly 18 per cent of the global medical tourism market.