DeitY seeks to bless Indian STB firms with ₹100-cr fund

Home-grown set-top box makers, including Videocon and Simmtronics, could soon be taking on the their Chinese counterparts with the Ministry of Information Technology proposing to set aside ₹100 crore to provide them with long-term credit and boost local manufacturing.

At present over 70 per cent of the set-top boxes used in India are imported, mostly from China. The Chinese vendors have been offering these boxes to smaller cable operators on lucrative financing terms, said an industry official, who did not wish to be identified.

“Indian manufacturers do not have deep pockets and hence they are losing out to the Chinese. Hence, the ₹100-crore corpus is a welcome move as it will provide a level playing field for the Indian firms,” he added.

In an internal note, a copy of which was seen by BusinessLine , DeitY said: “It has been proposed that the Department of Electronics and Information Technology (DeitY) provide a ₹100-crore corpus … for Micro, and Small (and Medium) Enterprises (MSMEs) … to enable easier long-term finance for working capital to small and medium-size STB manufacturers.”

The corpus is to be offered through the Credit Guarantee Fund Trust, which was set up by the Ministry of MSME and Small Industries Bank of India (SIDBI) to ensure that money flows to smaller enterprises without any need for collateral and third-party guarantees.

“(The) MSME (Ministry) has indicated that it would be willing to take this proposal forward,” the DeitY note said.

Industry watchers said that the move ties in with the Centre’s larger goal of digitising the cable TV sector completely.

India has missed several deadlines to digitise the cable TV sector, which involves routing signals through set-top boxes that can track the channels being watched by viewers.

The latest deadline to achieve total digitisation is 2015-end. Demand projections suggest that about 110 million boxes will be needed to achieve the goal by next December.

Sensing the opportunity, foreign vendors, especially Chinese companies such as Huawei, have been flooding the market with low-cost set-top boxes. Many of them are said to be pushing substandard boxes.

The industry official cited earlier said that the size of DeitY’s contribution could be augmented in the days to come, depending on the industry’s response to the proposal.

In the last 12 months, the Centre has taken several decisive steps to promote the manufacture of set-top boxes in India. It now classifies the boxes as telecom network equipment.

The inverted duty structure, which meant finished goods are taxed at lower rates than the raw material, has been done away with, thereby helping Indian manufacturers produce boxes at competitive prices.

Recently, DeitY selected Bengaluru-based ByDesign India to develop the first home-bred conditional access system, which will further bring down manufacturing costs of set-top boxes.

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