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MSOs, DTH players to save Rs 150 mn in STB cost as govt reduces CENVAT

MUMBAI: Multi-system operators (MSOs) and direct-to-home (DTH) service providers got a four-month respite as Finance Minister P Chidambaram lowered excise duties that would bring down the cost of set-top boxes (STBs).

Though the interim budget offered nothing exciting for the media and entertainment sector, reduction came in the form of the Central Value-Added Tax (CENVAT).

The budget has proposed reduction in excise duty from 12 per cent to 10 per cent on all goods falling under Chapters 84 and 85 of the Central Excise Tariff Act schedule. Chapter 85 also comprises the Consumer Premises Equipment (CPE)—in other words, set-top boxes (STBs)—till 30 June 2014.

What it also means is that in the next four months, all imports of STBs will be marginally cheaper. As per market estimates, the industry will save around Rs 15 crore ( Rs 150 million) during this four-month window.

According to industry experts, a DTH STB will be cheaper by Rs 45–55 while the digital cable boxes will be cheaper by close to Rs 30 per box. It is estimated that till 30 June, DTH will add 2.5 million subscribers and digital cable under two million. The deployment of STBs has been slow in the quarter ended 31 December 2013 but the Indian Premier League (IPL) could give a marginal boost.

However, if the new government chooses to keep the rebate, MSOs and DTH operators will save around Rs 300 crore ( Rs 3 billion) as the industry estimate of the number of switchovers from analogue to digital during Phases III and IV of digital addressable system (DAS) is over 75 million.

Meanwhile, Dish TV has applauded the government’s duty reduction move. The DTH player has been urging the government to waive the 12.36 per cent service tax till the roll-out of GST and rationalise other taxes levied on the DTH industry.

Dish TV managing director Jawahar Goel said, “We welcome the duty reduction and hope that the multiple tax levies on the DTH sector will also be looked at and addressed by the next government.”

Another top executive of a leading MSO said that while it will not change life much, it will definitely help in slightly reducing the import duty. “Even if it’s small, all and any kind of reduction in tax is welcome. For us, it will save Rs 30 per box. If it continues after July, when the real uptake is expected to pick up, it will be a good amount,” he said.