The last few years have seen the unprecedented growth of the direct-to-home (DTH) sector in India. With Government stress on implementation of Conditional Access System (CAS) in the country, the sector got a big boost. However, the levying of 5 per cent customs duty the import of set-top boxes (STB) in the Union Budget 2009-10 has come as rude jolt to the DTH players.
exchange4media spoke to leading DTH players to find out the Budget implications for the DTH industry and whether the Finance Minister has been able to meet their demands.
Vikram Kaushik, MD & CEO, Tata Sky Ltd, pointed out, “The levying of customs duty on set-top boxes (STBs) will add to the cost of digital television services for consumers at large. The DTH industry is one of the most heavily taxed areas in the media and entertainment space. With an unprecedented 10 per cent revenue share payable to Government, the industry pays service tax, VAT, and in many states, entertainment tax as well.”
He further elaborated, “The DTH industry has been pressing for some relief for a long time. The imposition of 5 per cent customs duty will add to this burden. It is widely acknowledged that the DTH industry is playing a pioneering role in the digitalisation of television services in India. This will be a setback for that process by widening the price gap between cheap and under-declared cable services and transparent, addressable DTH services.”
According to Salil Kapoor, COO, DishTV, “The additional burden of 5 per cent tax on STBs will hinder the growth and will discourage the DTH industry from expanding business; this tax hike will be passed on the customers. Although we do welcome the removal of Fringe Benefit Tax (FBT) and introduction of GST (Goods & Services Tax), which will provide some relief to the DTH industry from multiple taxes from the Centre and the States. Focus on building infrastructure, power generation and opportunity for rural employment will increase income and purchasing power, which will add impetus to the television industry and DTH service providers.”
Anjan Mitra, Executive Director-India, Cable and Satellite Broadcasting Association of Asia (CASBAA), explained, “Any additional tax imposed on (import of) set-top boxes is like taking a step back. Imposition of an additional 5 per cent duty on STBs will hit spread and process of digitalisation in India, which had been flagged by TRAI, MIB and the PMO as a priority area. With STBs likely to become costlier, the consumer ultimately will have to shell out more.”
He further said, “At a time when the world is moving towards digitalisation, India’s tax structure is not giving any additional incentives for this. The situation is sad as domestic manufacture of STBs is almost next to nil and cable and DTH operators have no option but to import these STBs.”
Meanwhile, speaking on the scrapping of Fringe Benefit Tax, Barun Das, CEO, Zee News Ltd, said, “FBT waiver is of course welcome. However, certain parities with respect to print media are definitely need of the hour. The electronic media is still in its nascent stage as compared to the much older print media. Customs duty on STBs would not help in the proliferation of digitalisation. Digitalisation is definitely a way forward, which will help the television industry realise its true potential.”