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2025 Healthcare and Life Sciences Investment Outlook

2025 Healthcare and Life Sciences Investment Outlook

Mankind versus ChatGPT: Our Caveat for 2025

For the first time in AI’s and mankind’s history, the line between what is human and what is AI-driven technology is increasingly blurring, we are witnessing that ChatGPT and other OpenAI models, can influence the rates of false negatives and false positives in various healthcare and investment applications including algorithms that make investment calls based on future predictions. We have been making annual healthcare and life sciences investment predictions since 2013 with 95% accuracy except during the Covid pandemic years. It seems that ChatGPT itself is turning out to be a black swan event for the algorithms which are predicting the future so accurately in the past. As ChatGPT becomes mainstream, we need to understand the “Confusion Matrix” (see chart below) that will ensure with the power of AI and ChatGPT versus the humans in the future as more and more AI-generated content and analytics proliferates the world in 2025 and beyond. 

Confusion Matrix for AI ChatGPT and Human Predictions
Confusion Matrix for AI ChatGPT and Human Predictions

As industries including, Healthcare and Lifesciences is adopting AI very rapidly for delivering healthcare and so do the Banking and Financial Services, investment managers using AI-driven algos for investment calls. We would need to take cognizant of the False Negatives and False Positive that would elevate the risks and mitigate accordingly. We have included AI as one of the factors in our 2025 Outlook, India Healthcare and Lifesciences Investment Heatmap.

2025: Heal the World – From Geo Politics to Socio Politics

In our 2024 forecast last year we included Geopolitics for the first time in our investment heatmap as the signals were emerging as early as mid-2023. While 2024 witnessed global geopolitics upheaval with regime changes through democratic elections and other means with over 60 wars and armed conflicts ongoing around the world, we were seeing signals of slowdown in growth and investments in Q12024 itself. As a result, as we exited 2024, the growth and investment climate slowed down significantly.

The broad global theme for 2025 is “Heal the World” for better outlook for 2026 and beyond.  If we are able to heal the world with robust socio political agenda it would turn out to be the future prosperity of mankind.

2025: India’s Healthcare and Lifesciences Innovation and Business Models

India was also not insulated with the global geopolitics impact. In 2024, there was ~50% decline in capex and investments in the sector.  We expect 2025 to continue to be a weak year for investments in the sector. After our general elections, there were uncertainties in our region and further slowing of investment and capex cycles on the back of global slowdown. Healthcare is a big creator of employment and it should not slow down any further in 2025.

Since Q12024, the signals were towards robust investments in early stage innovations and growth in new age business models which we have been labelling as “cross-domain” investment ideas. In March 2024, we released 2024 – India Healthcare And Life Sciences Investment Manifesto | Kapil Khandelwal KK covering key 40 bets that will be an opportunity to invest in the sector that will witness an upside beyond the market returns for the sector over the next 5 years. This will accelerate the investments that was with USD 857 million in 2024 to reach a unicorn status of over USD 1 billion in 2025. Fortunately, this is the only segment witnessing positive growth in investments in 2024 and continues to attract robust growth and investments. 

Hence, we have made attempts to analyse International ‘Geo Politics’ as a separate factor and bolt-on-top of our algo predictive models to adjust our heat map for 2024 to accurately predict whether the heat is on in our 2025 Investment Heat Map.

The wave of optimism for 2025 in Indian healthcare and life sciences stems from the following:

  • Over half of Indian consumers are increasingly curious to understand their body and well-being by ‘listening to their body’. Innovators and start ups are exploring this opportunity to scale up their ventures.
  • Many of the start-ups of the Pre Covid India Stack in healthcare are either pivoting to including AI tech or will perish as AI goes turbo. We are expecting around 450 such start ups at this stage of AI upgrade.
  • Agentic AI effectively turbocharges the Do It For Me (DIFM) healthcare economy. Early adopters include GenZ and Millennials (approx 50% of Indians) users who will have their own bots or AI agents helping them choose products and execute transactions in adoption of healthcare products and services as the line between what is human and what is technology will be blurring. Competition will tick-up as starts-ups grow.
  • “AI for All is not All” as consumers are getting more consumerised for their health needs. AI cannot solve it all for all of Indian consumers healthcare needs. These include Gen X and Seniors (approx 44% of Indians) are skeptics and late adopters. This innovative products to serve these cohorts is key.
  • New business models/incubation for investments are emerging (see our 40 Future Bets in Healthcare 2024 – India Healthcare And Life Sciences Investment Manifesto | Kapil Khandelwal KK) that are cross-domain and will be a potential USD 50 billion addition to India’s GPD in next 5 years.
  • Healthcare real estate will also explore cross-domain concepts to fit consumer needs.
  • Wellness is now an ‘Avatar’ that is experiential and connects with other lifestyle domains such as beauty, cosmetics, travel, tourism, hospitality, food, technology, wearables tech, work environment and many more. Holistic innovation in experiential longevity is emerging.
  • Alternative therapies are now body rejuvenation biohacks that traditional and alternative medicine and wellness cannot provide or fulfill completely and which health fascism fuels. Indian GenZ and Millennials are leading this change.
  • New age innovative medical integrative DIFM models will be a push for medical and wellness tourism repositioning for India medical tourism.
  • In 2024, the BSE Healthcare Index was one of the standout performers, delivering an impressive 40% year-to-date (YTD) return. This trend continues in 2025.
  • The valuations have come back to realistic levels to peak by 2026-27.
  • Private hospitals are now aggressively embarking on increasing bed capacity after a phase of consolidation in 2024.
  • M&A and buyouts are expected to continue to be buoyant.
  • Healthcare real estate are expected to launch and kick off innovative cross-domain formats.

The 2025 India Healthcare and Life Sciences Investment Heat Map is as under:

2025 India Healthcare and LifeSciences Investment Heat Map
2025 India Healthcare and LifeSciences Investment Heat Map

Healthcare Financing

With mental health needs and healthcare fascism at its peak, newer products and services for financing longevity and healthy lifestyle for the Gen Alpha and Gen Z are emerging. Cross domain models of business are emerging to address the needs to finance consumers needs to such emerging products and services. 

2025 Outlook: Moderate

  • What may go wrong: false claims by online influencers, right pricing, reach and penetration to consumers, improper lifestyle based consumer segmentation, business volatility in some NBFCs, newer regulations on consumer credits by RBI, lower consumer spending and financing, outstanding credit cards debt
  • What’s going right: AI intervention and solutions, lower interest rates,

Medical Education

Medical education content is no longer the marker for better valuation and funding. The market has flipped to buyers’ market. The investors are no longer entering into opportunities at the current valuations and will lead to rerating downwards. Need major reforms in the medical education sector.

2025 Outlook: Low

  • What may go wrong: lower student enrollment, regulatory issues, new emerging careers in industry, accreditation and learning models, international players and competition
  • What’s going right: AI-generated content creation, immersive content, stable valuations

Med Tech Innovation and Life Sciences Discovery and Clinical Development

Trump Administration and the US BioSecure Act will be a positive. India has to enter the big league of biologics with global partnerships as Chinese firms will face headwinds. Cross domain innovation with AI is the key to leapfrog in the global race. Also India needs to reinforce its success in Covid vaccine development to reignite confidence in India. Expect a major IPO.

2025 Outlook: Moderate

  • What may go wrong: over dependence on Chinese players, slower reverse brain drain transition of drug hunters from US, low qualified life sciences professionals pool, lower grant funding, no further sops in the 2025 finance budget
  • What may go right: emerging social innovation models, market appropriate solution development, native AI models

Pharma and Therapeutic Solutions

Volume growth in the domestic markets, US generics price erosion, with the softening of input costs, ongoing decoupling of supply chain with China and currency depreciation to continue in 2025, will improve the margins very marginally.  The companies with strong cash positions will increase capex and also buyouts and M&A activity. Not any major name IPOs expected.

2025 Outlook: Moderate

  • What may go wrong: Slower China decoupling of supply chain, continuing US generics markets prices decline, potential increase in tariffs by the US under Trump regime, increased APIs prices, continuing domestic market volume degrowth, no further sops in the 2025 finance budget
  • What may go right: US BioSecure Act to favour India, increased R&D spend, new products pipeline, newer capex cycles, multi-year high in US active drug shortages

Healthcare Providers

Capacity creation will now be around 2500 beds in tier 2 and 3 cities. Funding cycles improve as internal accurals improve for fresh capex and capacity expansions and inorganic expansions. Expect a few IPOs, buyouts and exits via secondary sale.

2025 Outlook: Hot

  • What may go wrong: margin pressures, supply and demand mismatch in micromarkets, lower medical tourists arrivals, rising valuations, stable margins
  • What may go right: asset-lite models, launching into new medical tourism markets

Healthcare Insurance

Payors are seeing insurance penetration grow since the Covid pandemic. Newer markets in the GenZ and Millennials cohorts and geographically tier-2 and 3 cities are the essential for growth. Bundled products and services for health and wellbeing is the key. AI modelling will assist in accurate underwriting of risks. Agentic AI entry to change the solicitation and selling customised bundled products.

2025 Outlook: Hot

  • What may go wrong: bundled product for consumer needs, product approvals, risk mitigation for new products, consumers need for longevity, agentic AI to connect consumers, payors and providers for seamless services
  • What may go right: Consumer demand, reduced loss ratios, AI fraud detecting agents

Health Retail

Anti-digital trend is catching up with consumers expecting analogic human to human touch for consuming healthcare products and services in cross-domain settings which is now perceived aspirational and desirable. Many digital business models need to tweak their phydigital presence mix. Its back to innovative traditional health retail settings.

2025 Outlook: Hot

  • What may go wrong: failing to provide the human to human touch points, talent for new age health retail settings, anti-digital pivoting, wrong business model assumptions
  • What may go right: exits in failed business models, profitability focus, phydigital presence

Wellness

The past wellness definition is no longer relevant. New age ‘Gen-Z’ed wellness business models and innovation is emerging which brings in the cross-domain experiential products and services. Redefinition of wellness is the key and will show case the future winners. These innovations will fuel India’s new age wellness tourism too.

2024 Outlook: Hot

  • What may go wrong: regulation, talent and skills in cross domain products and services, micro market segmentation, faster beta testing, new mass market business models, spurious social media channels, fake outcome/claims
  • What may go right: Gen Z micro segmentation, wearables, biosensors, newer phydigital formats

Alternative Therapies

Redefined by cross-domain influences, emerging tech, wearables, biosensors, cutting-edge innovation in life sciences with other domains fueled by GenZ experimentation with new biohacking and health fascism expressions. It is going to be the next destination of value care in healthcare emerging from real need and experience of consumers for Do It For Me (DIFM) healthcare.

2025 Outlook: Hot

  • What’s going wrong: regulations, consumer education and confidence, clinical research, new product development, new mass market business models, repeat sales, spurious social media channels, fake outcome/claims, wrong Gen Z role models, developing phydigital formats
  • What may go right: discretionary consumer spending, newer cross-vertical innovative business models, mainstream complementary treatment, wearables, biosensors

Moving Forward

2025 will be a pivoting year for mankind, healthcare and investing as AI for All is not All.

Happy investing and stay strong!

Media Coverage

M&A, Buyouts in Healthcare to Remain Coverage in VC Circle

M&A, Buyouts in Healthcare to Remain Coverage in VC Circle

2025 India Healthcare and LifeSciences Investment Outlook Coverage in Express Pharma Feb 2025

2025 India Healthcare and LifeSciences Investment Outlook Coverage in Express Pharma Feb 2025

A Very Heavy and Weighty 2025 New Year Resolution!

A Very Heavy and Weighty 2025 New Year Resolution!

2025 New Year Resolutions

It’s that time of the year when we make New Year’s Resolutions. This year’s number one resolution that tops the chart is healthy diet and weight loss which is being wished by 51% of the people. Next is wishing for wealth which is wished by 21%. Finally comes spending quality time with friends and family which is wished by 14%. This is much lower this year post covid lockdown. Is there any correlation to the obesity trends in India with the New Year’s Resolutions for 2025?

Obesity Trends in India

Body Mass Index (BMI) scale is used to indicate if one is obese or not. The different classifications are as unde for India. Please note that this is not the same for other countries which may vary or are higher:

  • Normal BMI: 18.0-22.9 kg/m²
  • Overweight: 23.0-24.9 kg/m²
  • Obesity: ≥25 kg/m²

The prevalence of obesity has been increasing, with nearly one in four Indians now considered overweight. Approximately 24% of women and 23% of men aged 15-49 are classified as overweight or obese in India. Obesity rates are higher in urban areas (30% of men and 33% of women) compared to rural areas (19% of men and 25% of women).

Dietary Trends in India

The Economic Survey 2023-24 noted unhealthy diets and rising rates of obesity need to be tackled urgently to improve health parameters, in order to reap the gains of the country’s demographic dividend. Citing the Indian Council of Medical Research’s (ICMR) latest dietary guidelines, published in April this year, it notes the fact that 56.4% of the total disease burden in India is due to unhealthy diets. The ICMR report observes that the upsurge in the consumption of highly processed foods, laden with sugars and fat, coupled with reduced physical activity and limited access to diverse foods, exacerbate micronutrient deficiencies and overweight/obesity problems.

Correlating Obesity, Diet and 2025 New Year’s Resolutions

There seems to be a positive correlation between the weight loss and what people wishing to achieve in 2025 with respect to their diet and weight. These are many reasons for this correlation. These could be:

  • Calling for ill-Health: Obesity leads to chronic inflammation and impact longevity (listen to podcast on longevity https://open.spotify.com/episode/19pvPEE7f5UGgzJyXSlLsS?si=5f06687dfcf64232). Over the years, the body’s organs don’t function as effectively as they should. Damage to the pancreas, for example, leads to diabetes; damage to the heart leads to cardiovascular disease; and damage to the brain leads to dementia. And even if someone loses weight, the damage is not irreversible. (The liver is the only organ that can regenerate itself.) Obesity is also linked to many cancers, musculoskeletal problems, depression and obstructive sleep apnea. Some of the co-morbidities with obesity and overweight people include:
    • Chronic Kidney Disease
    • Type 2 Diabetes         
    • Cardiovascular Disease
    • PAD (Peripheral Arterial Disease)
    • Alzheimer’s  
    • Heart Failure
    • MASH (Fatty Liver Disease)

Sounds very alarming for increasing healthcare costs!

  • Better Employability: As per the National Health and Family Surveys, obese and over weight people have issues with their employability and their ability to work. This is tied to their overall health and their physical abilities. Hence being fit and normal BMI works in their favour.
  • Lifestyle, Fashion and Aesthetics: One of the most fundamental drivers of behavior is the desire to look attractive. Sales for personal care and beauty products easily exceed USD 25 billion by 2029, and sales for apparel reach USD 550 billion by 2029. This is a very aspiration segment. (listen to podcast: https://open.spotify.com/episode/36TCAlD1gglGXoWJtDa27o?si=09dd617d77434985). A significant number of Indians are unhappy with their weight and body image. A study involving participants from 65 countries found that Indians have lower body image satisfaction compared to many other nations.

Meeting and Beating the 2025 New Year Resolutions

Like any resolution, the compliance to any New Year Resolution is very low. Coming to managing ones weight reduction, the compliance is even lower. The level of compliance with weight loss programs among Indians varies widely. Several factors influence this, including cultural attitudes towards weight, accessibility to resources, and individual motivation.

  • Cultural Attitudes: In many parts of India, there is a cultural acceptance of larger body sizes, which can affect motivation to lose weight.
  • Accessibility to Resources: Access to weight loss programs, gyms, and healthy food options can be limited, especially in rural areas.
  • Individual Motivation: Personal commitment and motivation play a crucial role. Many individuals start weight loss programs but struggle to maintain long-term adherence due to lifestyle challenges and lack of support.

With such low levels of compliance and issues surrounding it, what has the healthcare industry done to find solutions to the weighty problems?

Healthcare Industry’s Invasive and Non Invasive Solutions to Obesity

There are several invasive and non-invasive solutions to obesity reduction. Here’s a brief overview of both:

Invasive Solutions

  • Gastric Bypass Surgery: This procedure involves creating a small pouch from the stomach and connecting it directly to the small intestine. This bypasses a large part of the stomach and some of the small intestine, reducing the amount of food you can eat and absorb.
  • Gastric Sleeve Surgery: Also known as sleeve gastrectomy, this surgery removes a large portion of the stomach, leaving a tube-like structure. This limits the amount of food you can consume.
  • Adjustable Gastric Banding: A band is placed around the upper part of the stomach to create a small pouch that holds food. The band can be adjusted to control the amount of food intake.
  • Biliopancreatic Diversion with Duodenal Switch (BPD/DS): This complex surgery involves removing a portion of the stomach and bypassing a significant part of the small intestine. It reduces the amount of food intake and nutrient absorption

Invasive surgery is expensive and not affordable by many. Also, this has to be followed up with non-invasive and other cosmetic surgery later on.

Non-Invasive Solutions

  • CoolSculpting: This technique uses controlled cooling to freeze and destroy fat cells. The body then naturally eliminates these dead cells over time.
  • SculpSure: A laser-based treatment that targets and heats fat cells, causing them to break down and be absorbed by the body.
  • Kybella: An injectable treatment that destroys fat cells under the chin, improving the appearance of a double chin
  • Emsculpt: This procedure uses high-intensity focused electromagnetic energy to induce muscle contractions, which can help reduce fat and build muscle.
  • Lifestyle Modifications: Diet and exercise remain fundamental. Behavioral therapy and support groups can also be effective in managing obesity

Each method has its own benefits and risks, and the best choice depends on individual health conditions, preferences, and goals.

GLP-1 The Magic Pill for Obesity

During 2024, a hype has been created over social media, celebrities both in Bollywood and Hollywood about GLP-1 (glucagon-like peptide-1), the wonder drug and magic pill for weight reduction. For the scientifically advanced beings, brief overview of the mechanism of action of GLP-1 (Glucagon-Like Peptide-1):

  • Secretion: GLP-1 is secreted by the intestinal L-cells in response to food intake.
  • Receptor Binding: GLP-1 binds to its receptors located in various organs, including the pancreas, brain, stomach, and heart.
  • Insulin Secretion: In the pancreas, GLP-1 enhances glucose-dependent insulin secretion.
  • Glucagon Suppression: It suppresses glucagon release, which helps lower blood glucose levels.
  • Gastric Emptying: GLP-1 slows gastric emptying, promoting satiety and reducing food intake.
  • Neuroprotection: It has neuroprotective effects and may improve cognitive function.

For the least scientifically advanced beings, GLP-1 works in reducing the food appetite and the weight of a person by 15-20%. In addition, GLP-1 also works on other co-morbidies such as

  • Diabetes Management: GLP-1 agonists are medications that help lower blood sugar levels by increasing insulin secretion and decreasing glucagon release. They also slow down gastric emptying, which helps control blood sugar spikes after meals.
  • Weight Loss: These medications are also effective for weight loss. They work by reducing appetite and increasing feelings of fullness, which can lead to reduced calorie intake and weight loss.
  • Cardiovascular Benefits: Some GLP-1 agonists have been shown to provide cardiovascular benefits, such as reducing the risk of heart attack and stroke in people with type 2 diabetes.
  • Potential Kidney Benefits: Emerging research suggests that GLP-1 agonists may also have protective effects on kidney function.
  • Parkinson, Alzheimer’s and Dementia: Early clinical research is showing effective results in patients with neuro issues with a lower risk of the cognitive issues (such as memory loss) that are often an early sign of dementia.
  • Addiction Management: This is still very early and GLP-1 is being tested on animals and showing positive results on addiction to alcohol and nicotine.

Statutory Warning:

All drugs have side effects, and the GLP-1s are no exception. The most common ones are gastro-intestinal problems, for example diarrhea. In addition, the drugs cause the loss of lean muscle mass, which is particularly concerning for the elderly. Moreover, newer formulations or the next generation of GLP-1 are also being researched and will circumvent the side effects.

GLP-1 in India

In India, several GLP-1 (glucagon-like peptide-1) receptor agonists are available for the management of diabetes and obesity. Here are some of the notable ones:

  • Liraglutide: Marketed under the brand name Lirafit™ by Glenmark Pharmaceuticals, this drug is used to improve glycemic control in adults with type 2 diabetes.
  • Semaglutide: Available as an oral formulation, this drug is marketed by Novo Nordisk India and is used for diabetes management.
  • Exenatide: Another GLP-1 agonist used for diabetes treatment, though specific brand names in India may vary.

I am also informed that there is a venture working on GLP-1 extracted from plants peptides under development.

As for me, I am wishing that 2025 will bring in more innovation in GLP-1 solutions which are more effective!

Happy New Year 2025!

Rebooting Age: Long-Living India

Rebooting Age : Long-living India

Podcast

QuoteUnQuote with KK and Dr. Deepak Kumar Saini, Convener, Longevity India and Professor, Dept. of Developmental Biology & Genetics Indian Institute of Science (IISC), discuss Bet #3 on anti-ageing tech and products that is going to be a major trend in the next 5 years. Why is it so? 

As 50s is the new 30s now. Present Genx and seniors would like to reverse age or age slowly. By 2047, over 300 million Indian would be Senior Citizens and our dependency ratio will be around 40%. Indian would like to extend their lifespan 20% to 50%. But the trick here is to ensure that the end of life after prolonged life is a quick process rather than a prolonged decline. 

Indexation and Canons of Taxation: Have We Learnt Anything from Angel Tax?

Indexation and Canons of Taxation: Have We Learnt Anything from Angel Tax?

Preamble

In my Macroeconomics Course in College, I was introduced to the Canons of Taxation are principles that guide the design of a fair and efficient tax system. Adam Smith, in his book *The Wealth of Nations*, introduced four fundamental canons of taxation:

  • Equity: Taxes should be proportional to the taxpayer’s ability to pay. This means that individuals with higher incomes should pay more taxes than those with lower incomes.
  • Certainty: The tax amount, payment time, and method should be clear and certain to the taxpayer. This helps in planning and reduces the chances of arbitrary taxation.
  • Convenience: The tax system should be convenient for taxpayers to comply with. This includes the timing and method of tax payments.
  • Economy: The cost of collecting taxes should be minimal. The tax system should not be overly expensive to administer.

Modern economists have expanded these canons to include additional principles such as productivity, elasticity, simplicity, and diversity.

However many Governments around the world, including India do not follow these Canons of Taxation and make the taxation more complex rather than simplistic. From an investor point of view, the latest Budget for FY 2024-25 is one such instance where the Ministry of Finance has demonstrated one case of positive and one case of negative principles of canons of taxation. From an investor point of view, on the positive side, the Budget has abolished the Angel Tax and on the negative side, the Budget has abolished the indexation applied on Long-Term Capital Gains (LTCG) for computation of LTCG by reducing the LTCG rate from 20% with indexation to flat 12.5%. Let’s discuss this in detail.

Angel Tax Abolition  – Positive Canon of Taxation

When late Finance Minister and President of India Pranob Mukherjee, introduced the Angel tax in 2012, the justification given was that it was to prevent money laundering through inflated valuations. However, most start ups are valued higher than fair market value. Most angel investor would value these angel investments looking at the future growth potential and at the time of investments, these start ups had no or low revenues and profits. It is but obvious that the valuation methodologies would be higher than the market value. The angel tax had several significant impacts on startups in India:

  • Valuation Challenges: Startups often faced difficulties in justifying their valuations to tax authorities, leading to disputes and potential tax liabilities.
  • Investor Hesitation: The tax created uncertainty and risk for angel investors, making them more cautious about investing in early-stage startups.
  • Cash Flow Issues: Startups had to allocate funds to cover potential tax liabilities, which could otherwise have been used for growth and development.
  • Administrative Burden: The process of proving fair market value and dealing with tax assessments added to the administrative burden on startups.
  • Stifling Innovation: The overall environment of uncertainty and additional financial strain could stifle innovation and discourage entrepreneurship.

With the abolition of the angel tax in 2024, the startup ecosystem is expected to benefit from increased investor confidence and a more supportive regulatory environment.

Conclusion

The Angel tax did not pass the Canons of Taxation test and met its stated objectives. After lobbying for many years it is now abolished.

Removal of Indexation on LTCG for Sale of Real Estate

In the current budget, the Finance Ministry has removed the indexation benefit for calculating long-term capital gain (LTCG) on non-financial assets (including property). It has also lowered the LTCG tax rate to 12.5% (from 20% previously). The government has clarified that the removal of indexation benefits will not be applicable to old properties held before 2001, which would continue to get indexation benefits. This move is unlikely to impact the end-users who sell their existing house and reinvest in a new house (LTCG is not applicable). However, it will impact investors who would sell their house (investment) and reinvest in other asset classes.

Now the statement coming from the Finance Secretary in the media is that the new LTCG tax regime is in favour of the taxpayer as it lowers the LTCG burden. However,

this is not the case. Let is analyse this in detail.

Indexation on LTCG

There is an adjustment to the cost of acquisition of real estate of offset the inflation. Since 2001 onwards is the time frame when the new LTCG tax regime will impact the taxation, the following chart shows the indexation with 2001-02 as 100.

Indexation for LTCG Since 2001-02 Till Date
Indexation for LTCG Since 2001-02 Till Date

Assuming that an investor bought the property in 2001-02 at INR 100, the indexation benefit will be that if sold in 2024-25 it will be valued at INR 363, that is a multiple of 3.63x and this will be the cost that will be deducted from the sale consideration for computation of LTCG on the profit on the sale of the property. Now this benefit has been removed and a flat rate of 12.5% of sale consideration. This change has its own pros and cons and debunks what the Finance Secretary talked to the media about the new LTCG tax regime. Let’s see the different scenarios and time frame and the tax burden under the two LTCG tax regime.

INR 100 Asset @ 5% pa Appreciation Illustration

INR 100 Asset @ 5% pa Appreciation Illustration
INR 100 Asset @ 5% pa Appreciation Illustration

Clearly, the investor pays more LTCG when the indexation benefit is removed with lower tax rate of 12.5%.

INR 100 Asset @ 10% pa Appreciation Illustration

INR 100 Asset @ 10% pa Appreciation Illustration
INR 100 Asset @ 10% pa Appreciation Illustration

The investor only gains to pay less tax if the property is held for 10 years and more and appreciates in value @10% pa. Therefore we can conclude that the impact on relatively shorter-term investments (<5 years) where market price growth is <10% p.a. is negative. Conversely, the impact of this new regime would be neutral/marginally beneficial for investments with longer holding period (>10 years) and where property price appreciation is at >10% p.a.

It’s a Bummer

As a healthcare real estate fund, the social infrastructure like hospitals do not appreciate > 10% pa. Also the investment and exit timeframe would be <5 years. This means that there is additional tax burden for the investors. However, we are not the only institutional investors who are impacted with this change in LTCG tax computation. The recent change in LTCG tax computation bring about many questions around the cannons of taxation and many more. These include:

  • Healthcare real estate in India is one of the most costliest in the world and hence its relative attractiveness reduces for international investors towards India due to the additional tax burden.
  • There should have been exceptions allowed for funds and institutional investors for their existing investments in property sector to allow for the projected returns. Any new investments could have been based on the new LTCG tax proposal. This will allow for certainty of gains and returns to the investors in their current investments.
  • There are doubts in the minds of the investors about the stability of the LTCG tax regime if they are tweaked in the name of lower tax burden which is totally not true.
  • The secondary sale of the property by investors may alter the exit process by the investors in terms of time and valuation to match the increased LTCG tax burden suddenly imposed under the new regime.
  • The real valuation of the property may be tweaked with cash in the transaction to lower the LTCG tax.
  • Other creative accounting practices may be introduced to capitalise on the property inflate their costs to offset the loss due to increased LTCG tax burden.

To conclude, the new LTCG tax regime on property is not a positive one and does meet the canons of taxation and is not going to meet its objectives like the abolished Angel Tax.

Bharatvarsh – Pilgrim Nation: The Land of Spiritual Wellness Travel

Bharatvarsh: The Destinations for Spiritual Wellness Journeys

Podcast

QuoteUnquote with KK and Dr Devdutt Patnaik, India’s top mythologist and author discusses on our bet #our Bet #22 on mythological/pilgrimage wellness/health that is going to be a major trend in the next 5 years from our 2024 India healthcare and lifesciences investment manifesto. Devdutt, clears the issues on Bharatvarsh, sprituality, spiritualism, the Great Indian Pilgrimage, destinations across Hindu, Jain, Buddhist followers, ancient practices and modern beliefs. He also discusses various emerging counter trends around non-traditional spirituality, conspirituality amongst the extreme rightists and wokes, fake narrative emerging out of AI and ChatGPT and how belief systems are being altered around practice of spirituality and religion.

Excerpts

What is Spirituality?
How is Religion Different from Spirituality?
How is Bharatvarsh defined by Politicians, Pilgrims and Vedas?
Are there Counter Trends to Spiritualism?
How do we address the Saviour Mindset?

Also Listen

The Mantra for Happiness
Veda, Weed and Yoga: Is it ‘Xeno’ to XYZ Gen?

 

GWI-Wellness Real Estate-2024

 

Global Wellness Trends - Trends in Spiritual and Numinous Moments in Architecture

Will Ayodhya Be The Mecca Of Medical Tourism? | Kapil Khandelwal KK

Mooring Around the Future of Chips in AI-dominated India

Mooring Around the Future of Chips in AI-dominated India

Podcast

QuoteUnquote with KK and Nitin Dahad, Tech Evangelist, Editor embedded.com, Writer

Also Watch

Raghu Panicker, CEO of Kaynes Semicon, gives us some background to the origins of the current semiconductor industry in India from the 1980s by two key figures: M.J Zarabi and Wally Rhines.

Hitesh Garg, India country manager for NXP Semiconductors, talks about key markets for NXP globally and in India, particularly automotive and industrial. 

Satya Gupta, a veteran of the Indian electronics industry in India. He has several influential roles in the industry and in policymaking

Bhanupriya Krishna, founder and managing director of Perceptives Solutions, talks about the lack of talent for addressing the semiconductor manufacturing industry in India

Pradeep Vajram challenges the current thinking in India to develop chips and IP for India only, highlighting that scale is key for investors in Indian semiconductor startups

Also Read

India to Build Chip Manufacturing Ecosystem, Talent Pool - Nitin Dahad, EE Times

Emerging Resilience in the Semi Conductor Supply Chain

Emerging Resilience In The Semiconductor Supply Chain

Growing the Investments in India Tech Stack and New Age Internet and Ecommerce

Growing the Investments in India Stack and Ecommerce

Podcast

QuoteUnquote with KK and Kevin T Carter, Founder and Chief Investment Officer, EMQQ Global, An Emerging Markets and Indian Exchange Traded Fund (ETF) on NYSE

Also Watch

What is ETFs?

A Random Walk Down Wall Street | Burton Malkiel | Talks at Google

Also Read

The Future of Indian Consumertech

BCG + Matrix Partners - Future of Indian Consumer Tech

Democratising Digital Commerce in India

Democratising Digital Commerce in India

Agri Revolution 2.0: Debunking the Poor Farmer Politics and Growing High Nutritional Food

Agri Revolution 2.0: Debunking the Poor Farmer Politics and Growing High Nutritional Food

Podcast

QuoteUnquote with KK and Harish Damodaran, Agri Expert, Editor, Author

In this podcast we discuss the dire and immediate need for an Agri Revolution 2.0 in India. As our population is ageing and health acuity increasing towards food intolerance and diet restrictions, we now need to also start producing more nutritious and healthy food not just for the elite classes but the masses as India enters mid-income countries club and the food basket of the people of India improves towards better dietary habits and food consumption.  This may mean we may have to start growing new varieties of foods.

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https://kapilkhandelwal.com/policies-and-regulations/pm-task-force/

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Health Issues from Food 

Celiac Disease

Food Allergies

Lactose Intolerance

Fake, Fakier, Fakiest? Who is going to Eventually Win the Race?

Fake, Fakier, Fakiest? Who is going to Eventually Win the Race?

Podcast

QuoteUnquote with KK and Prof Salvatore Babones, American Author, Sociologist , China Expert, Associate Professor @ University of Sydney and Founder Indian Century Roundtable (ICR) Think Tank https://www.indiancentury.org/

In this podcast we discuss the fake narrative on economic, population, societal transformation, supply chain decoupling, labour and unemployment, control over private enterprises, technology, environmental issues, dedolarisation, digital currency, political narrative, negative propaganda, global dominance and iron fist between China under Authoritarian Xi Xinping and Democratic India under Fascist Modi using the PESTC framework and who will win the global race?  

What is Fake, Fakier, Fakiest?

Fake News | Kapil Khandelwal KK

With PM Modi in Sydney

 

Prof Salvatore Babones Meeting With PM Modi in Sydney
Prof Salvatore Babones Meeting With PM Modi in Sydney

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How are Things Moving? The Future of Mobility

How are Things Moving? The Future of Mobility

Podcast

Confused about which personal mobility option to select. The traditional petrol/diesel option, or the hybrids or fully electric vehicles. The post covid scenario globally for the automotive and mobility industry is not so clear. QuoteUnquote with KK and Chetan Maini, Co-Founder and Chairman at Sun Mobility and Creator of Reva, India First Electric Car in 1999 we discuss about where the future of the automotive and mobility is moving. This is on the backdrop of Elon Musk and Tesla announcing a USD 10Tn investment to make the earth more sustainable. Chetan’s keynote presentation at Nasscom Product Conclave 10 years ago looked like a cut and paste in #Tesla Investor Day Presentation.

Tesla Investor Day

Sustainability of Delivery Apps

Zomato | Kapil Khandelwal KK