The finance ministry is set to convene a second round of discussions with insurers and hospital groups around mid-January to address the pressing issues of rising medical inflation and steadily increasing health insurance premiums. This initiative represents the government's continued effort to make healthcare more affordable and accessible for policyholders across the country.

Meeting Structure and Participants

The upcoming meeting will be chaired by financial services secretary M Nagaraju and will bring together key stakeholders from the healthcare and insurance sectors. The discussions will include representatives from multiple organizations working to address systemic challenges in health insurance.

Key Discussion Areas

According to a government official, the meeting aims to take stock of proposed industry measures designed to bring down health insurance premiums and ensure greater transparency in claim settlement processes. The discussions will also explore the role of the Policyholders' Education and Protection Fund, which has been established through the Insurance Amendment Act, 2025.

The talks build upon an initial meeting held in November, where the ministry raised concerns about affordability and requested that insurers and hospitals collaborate on several critical areas:

• Standardized treatment protocols
• Uniform hospital empanelment norms
• Faster and more seamless cashless claim processing

Regulatory Measures Under Consideration

The ministry has been examining various regulatory options to control sharp premium increases that have been affecting policyholders. One significant proposal under discussion involves mandating prior approval from the Insurance Regulatory and Development Authority of India when insurers seek to raise premiums by more than 10% annually for policyholders.

This approach mirrors the regulator's directive for senior citizens implemented in January 2025, which bars insurers from increasing premiums by more than 10% annually without regulatory consultation for customers aged over 60.

Market Context and Industry Significance

Health insurance continues to dominate the non-life insurance sector, representing the largest segment within this category. The sector's growth trajectory demonstrates its increasing importance in the Indian insurance landscape.

Government's Strategic Approach

The finance ministry has emphasized that hospitals and insurance companies must work together to ensure transparency and efficiency while making healthcare affordable and accessible for policyholders. Officials believe that the proposed measures are critical to controlling costs and improving the overall policyholder experience amid increasing claims.

The government's approach focuses on creating a collaborative framework where all stakeholders contribute to solutions that benefit policyholders while maintaining the sustainability of the health insurance ecosystem. The upcoming January discussions will provide a platform for evaluating the progress made since the November meeting and identifying additional measures needed to address ongoing challenges in the sector.

The finance ministry has mandated that pan masala manufacturers must apply for registration under the health and national security cess law immediately after it comes into effect from February 1. This new regulatory framework introduces significant compliance requirements and operational changes for the industry, as outlined in the latest FAQ issued by the finance ministry.

Registration Requirements and Process

Manufacturers operating machines across multiple factories must obtain separate registration for each facility through the Automation of Central Excise and Service Tax (ACES) portal. The registration process includes several critical steps and timelines that businesses must follow strictly.

Businesses must specify machine parameters including maximum rated speed and weight of specified goods in their declarations, as these factors are relevant for cess computation. The registration certificate becomes effective from February 1 for existing manufacturers, coinciding with when cess liability begins.

Cess Payment Structure and Compliance

The new law establishes a machine-based cess system calculated monthly based on the number of packing machines installed and their maximum packing speed. This cess applies on top of the existing 40.00% Goods and Services Tax rate, maintaining the total tax incidence at the current level of 88.00%.

Manufacturers can utilize temporary registration numbers to pay cess liability while their registration certificates are being processed. For new machines installed mid-month, the full monthly cess must be paid within five days of installation.

Monitoring and Documentation Requirements

The regulatory framework includes stringent monitoring provisions to ensure compliance and prevent tax evasion. Manufacturers must install comprehensive CCTV systems covering all packing machines and manual process units throughout their facilities.

Key monitoring requirements include:

• CCTV coverage of all packing machines and manual process units
• Footage preservation for 24 months
• Provision of footage to officers within 48 hours upon request
• Regular compliance verification through physical inspections

Implementation Timeline and Industry Impact

The finance ministry notified the rules under the Health and National Security Cess Act on January 1, with the law becoming effective from February 1. This timeline provides manufacturers with a limited window to complete registration and establish compliance systems.

Existing manufacturers who already own or control machines on February 1 can begin cess payments using temporary registration numbers while their certificates are being processed. The automatic approval mechanism ensures that applications are deemed approved if tax officers fail to take action within seven working days, preventing unnecessary delays in the registration process.

The new cess system aims to enhance tax compliance in the pan masala sector while maintaining the existing overall tax burden. The machine-based calculation method and enhanced monitoring requirements represent a significant shift toward more transparent and accountable manufacturing practices in the industry.