The Hindu Business Line : DTH set-top boxes may be no cheaper

New Delhi, Feb. 29 The domestic manufacturers of set-top boxes are expected to benefit from the Budget proposal to exempt certain components from duty taxes, but DTH operators and the CAS-notified cable industry may not necessarily be able to pass on the benefits to the consumers.

“Much more could have been done,” said Mr Ashok Mansukhani, President, MSO Alliance. Currently there is no duty on import of set-top boxes – about 90-95 per cent of them are imported. “It is so insignificant that the impact is homeopathic. Firstly, there is no import duty on STB, and the duty exemption on some components being reduced is not even worth talking about,” Mr Vikram Kaushik, CEO and MD of Direct-to-Home company Tata Sky, told Business Line. The industry had expected excise duty to be halved. It was also disappointed to not have its service tax complaints addressed. Currently, operators such as Tata Sky and Dish TV pay the Union Government a service tax, and State Government an entertainment tax.

Those already covered and those likely to come under the possible extended umbrella of the Conditional Access System are also not like to see any dramatic benefit. According to Essel Group’s Executive Vice-President, Mr A. Mohan, the Budget really didn’t do much for the television and cable industry and the distribution platforms. According to him, Indian-manufactured STBs currently cost Rs 500 - 600 more than imported boxes. Depending on what the duty-exempted components are, the Indian manufacturers could get a benefit of about Rs 75 per box. He also added that the reduction of excise duty from 16 to 14 per cent would only provide marginal relief.

Hoping that the entertainment tax would be subsumed in the GST (goods and service tax) regime, Dish TV was of the view that the Budget was a definite step forward in addressing the multiple layers of taxation being faced by it. Mr Jawahar Goel, Managing Director, Dish TV, however, welcomed the exemption of duty on components and said it could provide leverage and opportunity for DTH players to evaluate the option of manufacturing STBs locally. Bharat Electronics and TVS Electronics are amongst those who manufacture STBs in India and are likely to benefit from the Budgets proposal.

“For the first time, the broadcast and film 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. This will have an impact on the capital expansion plans of the sector and will improve the bottomlines,” said Dish TV’s Mr Goel. The DTH industry could also now offer more rental options to subscribers, under the provision in service tax rules that states that any item being provided under the ‘Right to Use’ to the customer but not covered under VAT will now be covered under ‘right to use’ in a move towards the GST regime. Currently both service tax and VAT were also being charged on the Consumer Premises Equipment being given under rental or lease models.

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