Jaitley had mentioned the following in his speech: "For entertainment
services, which is singularly handicapped by lack of investment,
but has tremendous opportunities for exports, it is proposed to
promote through suitable tax incentives contributions to venture
capital funds which will provide finance to this sector. We are
in dialogue with ministry of finance how best this can be done."
The verdict of the VC financing and mentoring session on the opening
day of the Ficci FRAMES 2003 held on 13 March was clearly in favour
of corporate governance and more transparency in the media business.
The Indus Entrepreneurs' (TIE) president elect and PassionFund
CEO Mahesh Murthy says: "Nice though the policy is, I think
there are very few or no venture capitalists who are even interested
in funding efforts in the entertainment sector. The issue is not
taxes - I am not sure that is the major problem."
"The key issues stopping investment in the entertainment and
media sector are everything from a lack of corporatisation, over-dependance
on personalities in businesses, low creation of intellectual property,
the non-transparency of distribution and doubtful exit routes,"
Murthy adds that VCs need to know whether they can get money out
of any investment. Then, they would want to figure out if they could
make any profits out of the investments. Then, and only then would
they even begin worrying about taxes.
Enam Financial Consultant CEO Mahesh Chhabria also seconds the
view: "Well, one needs to go through the fine print in greater
detail. As of now, nothing much has changed. Indian media companies
have failed to create sustainable media properties, create workable
business system models, tackle competition, develop alternate business
models, and ensure adequate returns to investors through corporate
governance. The companies have also failed to develop scalable models."
While speaking during the Ficci FRAMES 2003 session, Ambit Finance
pte MD Ashok Wadhwa had said: "The bad news is that VCs in
the television content business no longer exist - what remains is
private equity funding. "The so-called 'VCs' lost so much money
in the last two years that they have become hesitant."
Several other media analysts who spoke to indiantelevision.com
also voiced similar concerns. However, they added that the recent
crisis in Asian financial markets would definitely benefit listed
Indian companies as foreign financial institutions will channelise
funds into India. "But very little of this inflow will find
its way into the entertainment sector," they add.
Union minister of law & justice, commerce & industry Arun
Jaitley had admitted that there were problems stunting growth in
the course of his speech by saying: "We have immense potential
for exports in certain services sectors such as entertainment and
education. Each sector has its own specific problems such as lack
of investment, inadequacy of laws relating to piracy. Nonetheless,
we have to leverage India’s obvious advantages in these sectors."
The minister proposed to set up sector-specific working groups
with representatives of ministry of finance, the administrative
ministries concerned, the state governments, financial institutions
and the industry to work towards a common goal by framing action
plans to achieve the potential to be implemented within a specified
Exim policy expected to
boost investment in entertainment sector
Corporatisation key to TV content