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Budget 2010 Reactions: ‘Overall, Budget is positive for the media sector as a whole’

27-February-2010
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Budget 2010 Reactions: ‘Overall, Budget is positive for the media sector as a whole’

Industry honchos have largely reacted positively to the Union Budget 2010, presented by Finance Minister Pranab Mukherjee on February 26, 2010. Most have the termed the Budget as progressive and balanced. exchange4media brings the Budget reactions of a cross-section of industry honchos like Tarun Katial, MK Anand, Ambrish Bakaya, and Siddharth Shankar.

Tarun Katial, CEO, Reliance Media World (Big FM)

Prima facie, the budget is a progressive one. Pranab Mukherjee had to walk the tightrope of balancing growth versus deficit, and he has handled it very well. While there is no direct relief to the radio industry, there are several indirect benefits that the industry can reap.

Spends of Rs 66,100 crore for rural development and farm loan repayment extension promise to have a positive impact on the rural economy. This works in favour of the radio industry, which is poised for huge growth and expansion through Phase III of radio bidding, which would be targeted largely at rural India.

Phase III will be a game-changer for the radio industry, which will allow broadcasters to expand their footprint, while offering advertisers greater reach across the country.

The rural benefits also promise a very prospective outlook for the allied business – Big Rural, offering holistic solutions for clients’ rural marketing requirements.

MK Anand, CEO, UTV Broadcasting

The overall budget is positive for the media sector as a whole. Finally, the Finance Minister has considered the sector. Detailing some implications:

1) Direct taxes - due to the changes in tax rates employee take home will increase, which is beneficial.

2) Channels like UTV WM + UTV action will benefit from the clarification issued in respect of custom duty on imported cinematographic films. In the past, the customs authorities had made customs duty applicable on carrier value and license fee. Now, with it being clarified we can expect saving us 15-20 per cent. However, levy of service tax on IP would have some cost implications and this remains to be seen.

Ambrish Bakaya, Director - Corporate Affairs, Nokia India

The Union Budget 2010 is a progressive and growth-oriented budget, reflecting the Government’s commitment towards driving inclusive growth and a strong development focus, along expected lines. The Budget has addressed key areas, including education reforms, infrastructure spending, rural sector, and supported overall business and consumer concerns, including a focus on bringing back fiscal discipline and prudence.

We believe that this budget reflects the Government's disposition towards increasing employment, productivity, skill building and domestic demand and increasing India’s global competitiveness through necessary policy intervention and investments.

Specific to telecom

Continued support to manufacture of mobile handsets

We would like to thank the Government on its proposal to extend the benefit of exemption of Special Additional Duty of Customs (SAD) of 4 per cent on parts imported for manufacturing mobile handsets from July 06, 2010 to March 31, 2011.

Manufacture of parts/ accessories of mobile handsets

The Union Budget 2010 has also responded positively to the industry’s request on manufacturing of parts and accessories of mobile handsets in India. The Budget proposes to remove the 24 per cent import duty on components/ raw material imported for manufacture of batteries, chargers and other part and accessories. The will help bring more investment in the area to the country and encourage domestic manufacture of parts and accessories.

We believe these moves are extremely encouraging to the category, and will help catalyse India’s emergence as a global telecom manufacturing hub.

Simplification of refund procedure for import of mobile handsets

Separately, the move towards exempting the Special Additional Duty of Customs (SAD) of 4 per cent on import mobile handsets is also a very welcome step. This duty was hitherto refundable on payment of VAT; this step will make the entire process of handset imports much simpler, facilitating better cash flow in the industry.

Siddharth Shankar, Economist, Kassa Financial Services

Overall, the budget seems to have maintained a status quo. The reduction in personal income tax rate will have a direct impact on the consumer and he would be under less pressure to meet his daily needs. I do not see the consumption level going up drastically, because there exists a huge amount of food inflation and that will continue to go up in the coming months. Rise in fuel prices will also add to inflation.

What is disappointing is the fact that nothing much has been done to increase agricultural production, which is of core importance in the long run. Benefits like no service tax on transport or food grain would have no major impact on food inflation. Housing, etc., may not get much boost as was expected by industry. Larger coverage of service would add more services getting costlier. Rise in excise on cars could have been more.

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