| NEW
DELHI/MUMBAI: While the 2008-09 budget has largely left the media and entertainment
industry untouched, Finance Minister P Chidambaram announced some measures that
are expected to benefit the cable, direct-to-home (DTH) and IPTV growth in the
country.
Mixed bag for DTH, Cable Dish
TV MD Jawahar Goel feels the DTH industry has something to feel positive about.
"At present there is zero duty on import of set top boxes. Now the Finance
Minister has also removed duty on import of specified parts of STBs. This will
provide leverage and opportunity for DTH players to evaluate the option of manufacturing
STBs locally," he says. Tata
Sky MD and CEO Vikram Kaushik, however, doesn't agree that there is too much for
the sector. "The benefits are so insignificant that the impact will be almost
homoeopathic," he says. There
is only a relaxation on some of the components for manufacture of the STBs. "We
had expected much more, especially significant reduction on excise duty, which
has been denied us," Kaushik adds. The
issue of double taxation, with the entertainment industry having to pay both entertainment
as well as service tax, has been left unchanged. Goel,
however, gives a more detailed rationale behind being upbeat. He argues that since
the CVD (countervailing duty) is reduced from 16 per cent to 14 per cent, the
cost of the Consumer Premises Equipment (CPE) will go down and will benefit the
DTH operator who are already providing considerable subsidies to consumers. The
new provision introduced by FM in Service Tax, stating that any item being provided
under the "Right to Use" to the customer but not covered under VAT,
will now be covered under 'right to use.' This is a move towards the Goods and
Service Tax (GST) regime, Goel points out. He
says this will partly address the issue of multiple taxation on the DTH industry,
where presently along with the service tax, VAT was also being charged on the
CPE, though these were being given on rental or lease models. "This
will help the DTH industry to give more options to the consumers to acquire the
CPE on rental, which has been stipulated by Trai in its Quality of Service requirements.
It will benefit the industry by taking the CENVAT credit of the service tax paid,
thus positively impacting the cash flow of the capital intensive businesses,"
Goel says. The
multi-system operators (MSOs) are more cautious. Says Hathway Cable and Datacom
MD and CEO K Jayaraman, "It is too early to see how the STB vendors respond
to the duty waiver of some components and set up manufacturing bases in India.
This will succeed only if the foreign vendors start producing here. Local manufacturers
will also feel encouraged but they have to comply with the conditional access
vendor." The
MSO Alliance is not happy with the way the demands of the industry have been ignored,
especially on the issue of rationalisation of taxes. Says
MSO Alliance secretary Avnindra Mohan, "There is marginal benefit on some
STB components; it would be of some use only when Indian companies start producing
STBs on a large scale. As it is, 90 per cent of the STBs are being imported today,"
he holds. The
Cable Operators Federation of India (COFI) is deeply dissatisfied with the budget,
saying there is nothing in it for the local cable operators. Says
COFI president Roop Sharma, "There is no provision of making digital headends
cheaper. The marginal help to STB manufacturing would only be good for the DTH
players and also of IPTV. But there are only 500000 STBs in the Cas (conditional
access system) notified areas. So it hardly makes any difference to us. What the
cable industry needed was incentives for digital headends."
Broadcasters
feel digitalisation should get the push Broadcasters,
on the other hand, feel the budget is positive in what little it has to offer.
Says Star India CEO Uday Shankar, "The incentives provided for STB manufacture
is a welcome sign. In fact, anything that goes towards digitalisation is good
because this country is a victim of choked distribution pipes on analogue systems." Agrees
Global Broadcast News joint MD Sameer Manchanda, "The government has done
something for the STBs and also for the convergence equipment. Since this is good
for digitalization, it is also good for us as broadcasters." Sums
up INX Media founder and CEO Indrani Mukerjea: "The budget has provided an
impetus for growth to the Digital revolution - by reducing the duty on certain
specific components of STBs to nil. I am also happy that duty on convergence products
related to the media and entertainment industry has been halved. Of course, I
wish there had been a reduction in corporate tax rates for the industry too."
Film
industry feels left in the cold The
film industry has mixed feelings. Speaking for the multiplex operators, E-City
Ventures MD Atul Goel has this to offer. "The impact on the entertainment
industry would be limited, except for the customs duty reduction on equipment
from 10 per cent to 5 per cent. However, we are happy to note, from the Cenvat
reduction, that there is a direction towards convergence of indirect tax rates
from the existing inefficient regime. We sincerely hope that the Empowered Committee
of Finance Ministers recommend a substitution of entertainment tax levied on cinemas
with GST (to be rolled out by 2010)." Prime
Focus CFO Nishant Fadia feels the Indian film and entertainment industry should
have liked special tax concessions and a reduction in corporate tax. But, on the
positive side, he says, reduction of CENVAT in import duties and customs duty
on equipments are steps in the right direction. Nothing
for FM radio FM
broadcasters feel the budget has nothing specific to offer to spur the sector's
growth. Says Big FM COO Tarun Katial, "The service tax needed to reduce,
especially since the radio industry is at its infancy and has great employment
and media opportunities in the semi-urban and rural markets." Radio
City CEO and AROI president Apurva Purohit believes reduction in base rate of
excise duty from 16 to 14 per cent is positive for the industry overall. But there
is little for the sector. She says, "Development and supply of content for
use in advertising purposes has been brought under service tax net. This is likely
to see an increase in advertising cost bringing a slowdown in advertisement revenues
to broadcasters and print media which will ultimately be passed on to the consumer." | 
