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Union Budget 2015: FM players want incentives as Phase III approaches

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Union Budget 2015: FM players want incentives as Phase III approaches

The radio sector is optimistic and there is good reason for it as partial auctions and the migration to Phase III seem to be on track. With the Union Budget coming up on the weekend, there is a high sense of anticipation that some pressing issues, which were neglected in Budget 2014 would be addressed.

Chief among the radio industry’s requirements from the Finance Minister are uniformity and relief from taxation as well as a resolution to the FDI issue, which operators have long wanted to be increased to 49 per cent; in line with most other industries.

 “Advertisement in free to air mediums like radio should be treated differently and lower or nil service tax should apply for the same, aligning with the print and out of home industries. We look forward to necessary fiscal incentives in the form removal/ reduction of multiple taxes and levies and regulations which ensure transparency and power of choice to the end customer,” said Tarun Katial, CEO of Reliance Broadcast Network. He also spoke about increasing FDI in on-news radio and bringing it at par with television broadcasting as well as relaxation of customs duty on radio and television broadcast equipment should also be relaxed.

Nisha Narayanan, COO of Red FM wants priority lending sector status to be accorded to radio so that they can get financial aid at lower rates and easier. Priority lending will be important especially at this stage as private FM operators gear up for expansion and with new frequencies up for grabs in the second phase of auctions  by Q2 or Q3’15.

She also spoke about the need to remove service tax charge on radio advertising. Explaining the rationale behind asking for this, Narayanan said, “Radio competes directly with print media in local towns and cities.  However, while there is no service tax on advertising in print media, radio advertising incurs such tax. This creates a non level playing field.”

“Reduce customs duty on radio equipment, especially on transmitters, consoles, etc. which are not produced in India.  There is therefore no justification for the high CVD and additional CVD being charged.  Moreover, India has one of the highest import duty rates as per attached chart of comparative international customs duty charges on transmitter,” she further added.

Apurva Purohit, CEO of Radio City 91.1 FM, said the budget could potentially augment the short and the long term future of FM in India. The FM industry needs the FM to give a fillip to expansion and radio penetration by expediting the auctions on priority, supporting the expansion by increasing the FDI to a minimum of 49% and incentivise by providing tax holiday to radio players investing in non-viable markets, she suggested. “This growth, coupled with the easing of regulations shall create fresh excitement in the medium and therefore enable growth,” said Purohit.

Vineet Singh Hukmani, MD of Radio One also asked that the FM allow the radio industry to raise funds via External Commercial Borrowing (ECB). In fact, this is something that even the Ministry of Information and Broadcasting (MIB) has also recommended to the finance ministry. “We hope Mr Jaitley allows this win-win approach as it ensures easier fund raising and will therefore also help the government to meet auction targets,” said Hukmani.

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