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Budget leaves broadcast industry high and dry

Arun_Jaitley01MUMBAI: While the broadcast industry was looking forward to a boost from Finance Minister Arun Jaitley in the form of 10 per cent reduction in customs duty on digital headends and set-top boxes (STB) and a lessening of service tax, the BJP-led government’s maiden budget was something of a disappointment for the industry.

The Union Budget has left the industry high and dry, without giving any respite or impetus. The only saving grace was the doing away of the basic customs duty on LCD and LED TV panels of below 19 inches. Basic customs duty on colour picture tubes for manufacture of CRT TVs has also been waived from earlier 10 per cent.

RC Venkateish

RC Venkateish

DTH Operators Association president and Dish TV CEO RC Venkateish said that there is nothing exciting for the industry. “There probably wasn’t much time for the minister to look into our demands. However, we are hopeful that the ministry will look into them. We will also continue to press our demands,” he said.

While Venkateish is hopeful, Videocon d2h CEO Anil Khera and Hathway Cable & Datacom MD & CEO Jagdish Kumar are disappointed.

“It is a disappointing budget for the cable TV industry. We were expecting some reduction in customs duty on STBs because we require huge volumes of STBs for DAS Phases III and IV. Unfortunately, there is nothing in the budget for the cable TV industry,” Kumar opined.

Jagdish Kumar

Jagdish Kumar

When asked about the impact of the waiver of customs duty on TV sets, Kumar said that it will marginally impact costs. Venkateish feels that it will have no major effect.

“The budget is disappointing for the cable and DTH industry. We were looking forward to abatement in service tax for DTH which has not happened,” Khera said.

Digicable Network MD and CEO Jagjit Singh Kohli feels that the reduction in customs duty on LCD and LED panels will give a boost to the proliferation of devices. “This will enable the industry to have a wider reach,” he added. “MSOs will have to start focusing on the delivery of content on these devices.”

Anil Khera

Anil Khera

From the broadcaster’s point of view, Reliance Broadcast Network CEO Tarun Katial said, “The complete reduction of customs duties on LCD and LED televisions will give a significant boost to the purchase of television sets. The decision would convert single-TV households into multi-TV households, resulting in an increase in the number of TV viewers, which is good for the industry.”

Katial feels that for the radio sector, which is awaiting Phase III auctions, there will be announcements in future. “With not much for the media and entertainment industry in the budget, there would be anticipation of a further announcement in line with the policy initiatives, especially for the radio sector.”

Tarun

Tarun Katial

B4U Channel CFO Sandeep Gupta added, “The budget seems to be a pre-reform budget; it apparently has nothing major for the broadcast sector. With the overall growth in the economy, there should be growth in the business. A specific positive which may be a boon for the industry is that with the reduction of customs duty on television sets, the number of TV-owning households would increase.”

Gupta added that with a greater focus on broadband, there lies a bigger opportunity. “There would be more opportunity to exploit content with a push for broadband connectivity and power in the rural areas,” he added.

Jaitley has given the provision of Rs 500 crore (Rs 5 billion) CapEx for broadband connectivity in rural areas.

KPMG India partner and head of M&E Jehil Thakkar summed it up, “With a myriad of taxes in various forms and multifarious statutory compliances, the M&E sector was keenly awaiting the Union Budget. The industry hoped for simplification of the onerous tax laws and resolution of long-standing tax controversies including the huge levy of entertainment tax, uncertainty surrounding withholding tax on various payments, levy of service tax as well as VAT on certain transactions, etc. To this end, there are no major proposals in the budget which are specifically relevant to the M&E sector, except for extension of the levy of service tax to all advertising mediums (other than print media).”

Also Read from our Budget package:

Online & mobile advertising will now have to swallow service tax pill
Prasar Bharati’s share lifts to Rs 24.2 bn as Budget allots 33.2 bn to MIB
Government to launch channels for farmers and North East
M&E stocks do well on Budget day; news broadcasters do not join the party
Government allocates Rs 5 bn for rural broadband connectivity