The OOH players are quite optimistic about the Union Budget 2010 regarding GDP growth. They are expecting that there would be no increase in service tax or VAT. The OOH players are also looking forward to additional benefits been given to new media options and digital OOH.
Sunder Hemrajani, Managing Director, Times Innovative Media Ltd, said, “It needs to be a growth-oriented Budget, which would drive the GDP growth to 8 per cent, in fact, closer to 9 per cent. This would put the advertising industry back on double digit growth trajectory. The OOH segment would be a direct beneficiary. Also, on the supply side, any investment in the creation of physical infrastructure like expressways, metro rail and airports is likely to benefit the OOH industry directly. The underlying sentiment is quite positive, but there is need to sustain the momentum.”
Haresh Nayak, CEO, Posterscope India, said that his wishlist would start from promoting the medium and taking it to next level. “The industry has gone through a slowdown and firstly, the Budget should ensure that there is no increase in service tax, it should remain the same and should be made more simplified by removing the higher education cess and put it under one head and redistribute it. Corporate tax, which is currently at 30 per cent, should be brought down to 25 per cent. With the competitive environment in which the OOH sector operates, with no contracts or AOR for almost 50 per cent of the industry and every campaign is a pitch, it is becoming unviable to operate under such a heavy tax,” he added.
Nayak further said, “The industry should be promoted by giving additional benefits to new media options and digital OOH; more importantly, where in it is adding value to the society through street furniture and other formats. Promoting digital OOH will not only bring in accountability, but also class and quality to the city infrastructure.”
“Another issue that the OOH industry faces is VAT. The industry runs on a combination of production and services. When it comes to VAT, the process becomes very complicated. In the given competitive environment, I want VAT to be centralised rather than state wise,” he added.
According to Nabendu Bhattacharya, Founder, Milestone Brandcomm, “Service tax shouldn’t increase from 10.2 per cent to 12.2 per cent. The client budget will then reduce. If service tax increases, it will adversely affect OOH advertising.”
M Kumar, General Manager, Jagran Engage, noted, “The OOH industry has seen some changes over the last couple of months that are certain to alter its landscape. The DOAA has taken some great steps towards regulating the ground rules for operating in the market, which is certainly welcome. This is likely to be closely followed by the Mumbai chapter as well. The Government will do well to recognise these efforts and partner with us to frame friendly policies for the business, rather than take ad hoc decisions.”
According to Gour Gupta, COO, Platinum India, “There would be an ebb in the spends after the Government withdraws the stimulus package. So, the Government should be careful in doing so, keeping the recovering state of economy in consideration. Increase in the taxes (VAT) would indirectly affect the advertisers’ budgets, indications of increase in service taxes would add on to the same. The next phase in the OOH sector is to go digital, hence, there should be adequate motivation for these technological investors to take this medium to the next stage.”