India’s Hospital Industry Seen Growing 11–12% Annually Over Next Five Years: Report

A new report released on Wednesday projects robust and sustained growth for India’s hospital industry, with revenues expected to rise at a healthy annual rate of 11–12 per cent over the next three to five years.

Notably, the report attributes this momentum to rising healthcare needs, expanding insurance coverage, growing medical tourism and increased investment in hospital infrastructure.

Importantly, one of the main drivers behind this positive outlook is India’s long-standing shortage of healthcare infrastructure.

Despite accounting for nearly 18 per cent of the global population, the country has only about 16 hospital beds per 10,000 people.

By comparison, this figure falls significantly short of the World Health Organisation’s recommended benchmark of 30 beds per 10,000 population.

Consequently, India faces an estimated shortfall of nearly two million hospital beds, underlining a vast and persistent demand for new hospitals and expanded healthcare facilities across the country.

Additionally, the report highlights a pronounced disparity between urban and rural healthcare availability. At present, urban centres account for nearly 65–70 per cent of hospital beds, despite close to two-thirds of India’s population living in rural and semi-urban areas.

As a result, large sections of the population continue to face limited access to quality medical care.

Private Sector Expected to Bridge Spending Gap

Since government healthcare spending remains modest at roughly 2–4 per cent of GDP, the private sector is expected to bridge this gap and play a decisive role.

In turn, private hospital chains are likely to emerge as the biggest beneficiaries of rising healthcare demand and increased patient inflows in the years ahead.

Meanwhile, demographic shifts are providing further impetus to the sector’s growth. With India’s ageing population expanding steadily, demand for chronic disease management, preventive care and specialised medical services is rising sharply.

At the same time, health insurance coverage has grown substantially, increasing from around 20 crore people in 2014 to nearly 55 crore in 2024. However, only about 40 per cent of the population currently holds health insurance, leaving significant scope for further expansion.

Looking ahead, CareEdge Ratings expects insurance penetration to improve to nearly 47–50 per cent by FY30.

Supported by schemes such as Ayushman Bharat, rising health awareness and simplified digital enrolment, this trend is likely to translate into higher hospital admissions and sustained demand for organised healthcare providers across India.