The DTH industry in India is likely to witness a price cut in its services in near future, with the government proposing a cut customs duty to zero per cent from the existing 7.5 per cent on specified parts of Set Top Boxes (STB’s).
“The Union budget 2008-09 has brought some positive highlights for the DTH industry. At present there is zero duty on import of set top boxes. The Finance Minister has also removed duty on import of specified parts of the set top boxes. This will provide leverage and opportunity for DTH players to evaluate the option of manufacturing STBs locally. Since the CVD is reduced from 16% to 14%, the cost of the C.P.E will go down to the similar affect and will benefit the DTH operator who already providing considerable subsidies to consumer and will further accelerate the date of digitalization in the country.” says Jawahar Goel, Managing director, Dish TV.
For the first time the media industry has been given a status along with the IT sector thus bringing down the duty on the capital equipment from present level of 10 per cent to 5 per cent which will further boost the investments in the industry.
The Countervailing Additional Duty has been reduced from 16 per cent to 14 per cent, the cost of the premises equipment would go down to the similar affect and will benefit the DTH operator who is already providing considerable subsidies to consumer and will further accelerate the date of digitalisation in the country.
Even renting out a set top box may get cheaper as the value-added tax (VAT) that was so far applicable in addition to the service tax has now been waved off. Other than that, wireless data cards are also set to get cheaper by 16 per cent as the excise duty has now been brought down to zero percent. The data card that till now cost you anywhere between Rs 4,000 to Rs 5000 will be cheaper by six hundred to hundred rupees.
Vikram Kaushik, CEO and Managing director of Tata Sky said there seems to be no significant difference to DTH sector, which is reeling under unprecedented Tax Burden of 56 per cent as no special mention is made for the bigger items such as differential treatment on Service Tax due to double taxation and desired level of reduction on Excise Duty on STBs.
“There seems to be no significant difference to the DTH sector, which is reeling under an unprecedented tax burden.” Kaushik says.
Says Hathway Cable & Datacom Managing director and CEO, “It is too early to see how the STB vendors respond to the duty waiver of some components and set up manufacturing bases in India. This will succeed only if the foreign vendors start producing here. Local manufacturers will also feel encouraged but they have to comply with the conditional access vendor.”
The MSO Alliance is not happy with the way the demands of the industry have been ignored, especially on the issue of rationalisation of taxes. Says MSO Alliance secretary Avnindra Mohan, “There is marginal benefit on some STB components; it would be of some use only when Indian companies start producing STBs on a large scale.”
The Cable Operators Federation of India (COFI) is also dissatisfied with the budget, saying there is nothing in it for the local cable operators. Says COFI president Roop Sharma, “There is no provision of making digital headends cheaper. The marginal help to STB manufacturing would only be good for the DTH players and also of IPTV. But there are only 500000 STBs in the CAS (conditional access system) notified areas. So it hardly makes any difference to us. What the cable industry needed was incentives for digital headends.”