The Hindu Business Line : <I>Desi </I>STB makers in a fix over customs duty

THE imbroglio over the implementation of the Conditional Access System (CAS) has not only confused the consumer on whether to buy a set-top box (STB) or not, but the domestic STB manufacturers are also finding themselves in a fix.

With the Government yet again extending the validity of the concessional customs duty rate of five per cent on STBs up to February 29, the indigenous industry has once more urged the Government not to grant further extension. It feels that "this would lead to losing business to cheap imports".

"It is an unfortunate situation where Indian manufacturers are losing out on opportunity to get into this segment of the industry. STB is a new product and in this era of convergence, it will enable the masses to access Internet and other value added services as well," says a Consumer Electronics & TV Manufacturers Association (CETMA) official.

The domestic industry, which was hoping that no more concessions would be given, has already made investments to the tune of Rs 500 crore, including investments on production, infrastructure and inventories.

The Finance Ministry had in May 2003 reduced the customs duty on STBs from 50.8 per cent to 5 per cent. The previous extension of the concessional duty rate was effective up to December 31, 2003. Expressing unhappiness over the recent Government decision to further extend the concessional duty rate, CETMA official said, "The Government should give indigenous manufacturers a fair chance."

The extension of concessions has led to investments getting stuck and the market being flooded with Chinese, Korean and Taiwanese products. "In fact, the domestic players are fully equipped to manufacture the product at the same rate as that of imported products," Mr Anoop Kumar, Chairman C-Net told Business Line.

Further, the indigenous players who have already made investments feel that as long as the customs duty concessions continue, they would not get any orders, the CETMA official said. "It seems that while taking this decision the Government was in a hurry as CAS was being implemented in Delhi and it did not want delays in STB availability," industry insiders said adding, "We hope that no more extensions are given."

Brushing aside the argument that the indigenous manufacturers are not equipped to manufacture digital STBs, industry players said, "in fact, Indian manufacturers are exporting STBs." Some of the Indian players include Chandigarh-based Deltron, Noida-based Kortek, C-Net Communications, Bharti, Philips, Thomson and Bangalore-based Slectron.

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