The Parliamentary Standing Committee on Health and Family Welfare (the “Committee”) recently submitted its 176th Report on “Affordability and Accessibility of Healthcare Facilities in Public and Private Sector.” The Committee evaluated the current state of healthcare in India from the perspective of affordability, efficiency, and inclusiveness, and has recommended measures to strengthen accessible healthcare across both the public and private sectors.

The key recommendations of the Committee are set out below.

1. FDI: The Committee observed that the increasing influx of foreign direct investment into the operational management of private hospital chains is having a cascading effect on healthcare price hikes. It has recommended that the Government:

(i) strictly review and rationalize FDI limits in the operational management and acquisition of existing healthcare facilities to protect affordable mid-sized hospitals from predatory corporate buyouts;

(ii) make FDI conditional upon private sector investment in underserved regions; and

(iii) redirect and incentivize FDI toward the domestic manufacturing of medical technologies and pharmaceuticals.

2. Cross-Subsidization Policy: The Committee recommended that large corporate hospitals benefiting from government concessions (such as tax benefits and land subsidies) be mandatorily required to utilize a portion of revenues generated from international and high-net-worth patients to provide cross-subsidized advanced specialized care for economically weaker domestic patients, in line with practices adopted in several other countries. Further, hospitals should allocate up to 20% of the total bed capacity of the hospital for economically weaker sections at capped Government-approved rates.

3. Cost Rationalization: The Committee recommended the formulation of a legally binding framework to standardize and cap rates for certain medical procedures and diagnostic tests across all private healthcare providers. It further recommended the introduction of mandatory compliance audits for private clinical establishments to monitor deviations from standard medical practices — including unwarranted surgical interventions — and strict audits of private hospitals offering Diplomate of National Board and residency training programs to prevent exorbitant fee extraction. Additionally, it recommended that the Government establish a unified, fast-track grievance redressal ombudsman specifically designed to audit excessive billing and resolve insurance claim disputes in the private sector.

4. MRP & Pharmacies

(i) The Committee recommended that the Government implement rigorous price controls on life-saving drugs and over-the-counter medicines in the open market, supported by a comprehensive statutory price control framework. It further recommended that the gap between the landing price and the MRP for medical devices and drugs not exceed 20%, to ensure quality products remain available at affordable prices.

(ii) The Committee observed that retail pharmacy malpractices include exploitation of high MRP margins, misuse of GST refunds through fraudulent billing, and the offering of arbitrary discounts outside prescription mandates. The Committee recommended the deployment of strict, multi-sectoral audits targeting retail pharmacy supply chains to cap unjustified trade margins and penalize fraudulent billing practices.

5. Policy Incentives: The Committee recommended: (i) that the Government should grant a complete zero to five year corporate tax exemption to global medical equipment manufacturers that establish full-scale manufacturing facilities in India with a requirement to undertake component localization; and (ii) that healthcare services be reclassified from ‘GST Exempt’ to ‘Zero-Rated GST’ framework to enable hospitals to claim input tax credit on medical equipment, consumables, and specialized infrastructure, so that the overall operational costs could be lowered.

6. Uniform Applicability of the Clinical Establishments Act: The Committee recommended the uniform and aggressive adoption of the Clinical Establishments (Registration and Regularisation) Act across all states and union territories. The Committee also highlighted that relying solely on voluntary NABH accreditation is insufficient and therefore a mandatory quality-assurance and price-transparency framework must be implemented across the country for all private clinical establishments to ensure standardized treatment protocols and protect patients from monetary exploitation.

Separately, the Committee also recommended a systemic overhaul of the existing regulatory framework to institute a “Single Window Clearance” mechanism for hospital registrations, blood bank licensing, and medical device manufacturing.

7. Insurance: In light of low private health insurance penetration in rural areas and informal-sector workers, and systemic inefficiencies relating to slow claim settlements, selective denial of services, and significant pricing disparities for the same procedure across hospitals, the Committee recommended: (i) setting up of a transparent and well-regulated health insurance sector with claim settlement data integrated onto a common, publicly accessible portal; (ii) mandatory integration of all stakeholders — insurers, third-party administrators, and healthcare providers — into the National Health Claims Exchange (NHCX) to guarantee real-time, transparent claims processing; (iii) stringent regulatory penalties for arbitrary pricing and claim manipulation by insurers or empaneled hospitals; and (iv) continuous deployment of AI-driven triggers by the National Anti-Fraud Unit (NAFU) to penalize deliberate delays and ensure that all private insurance products align with the broader vision of Universal Health Coverage.

8. Emphasis on Digitalization and Drones: The Committee placed clear emphasis on leveraging digital infrastructure and drones to improve healthcare standards. Key recommended measures include:

(i) Digital health interoperability across the public and private sectors should be rapidly accelerated, supported by upgraded broadband connectivity and digital infrastructure at all rural healthcare facilities to maximize the functional reach of platforms such as eSanjeevani.

(ii) Scaling up validated AI-enabled clinical tools, specifically: (a) MadhuNetrAI for frontline screening and early detection of diabetic retinopathy in resource-constrained primary settings; (b) UPPCHAR for AI-assisted health education, supportive care, and treatment adherence in advanced oncology; (c) AI-assisted Chest X-ray Triage to prioritize high-volume diagnostic imaging within 5–10 minutes while preserving final validation by certified radiologists; and (d) the “Never Alone” digital mental health framework (WhatsApp-integrated) for round-the-clock screening and facilitated expert consultation. The Committee also recommended accelerating the full integration of e-prescriptions, clinical decision support systems (CDSS), and remote patient monitoring under the Ayushman Bharat Digital Mission (ABDM).

(iii) Formal integration of drone-based logistics into the Universal Immunization Program (UIP), the National TB Elimination Program (NTEP), and the National Organ and Tissue Transplant Organization (NOTTO), to ensure the uninterrupted and rapid transport of vaccines, diagnostic samples, blood products, and tissue grafts.

While it remains to be seen how, and to what extent, the Committee’s recommendations translate into law and policy, it is clear that healthcare will remain a key area of regulatory focus and is likely to see significant legislative and administrative developments in the near term.

Authors – Amrita Patnaik – Partner and Ambika Sahai – Managing Associate.

Disclaimer: This note only highlights key issues and is not intended to be comprehensive. The contents of this note do not constitute any opinion or determination on, or certification in respect of, the application of Indian law by Talwar Thakore & Associates (“TT&A”). No part of this note should be considered an advertisement or solicitation of TT&A’s professional services.