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| I&B ministry wants zero duty regime on DTH boxes for 5 yrs |
| Ashish Sinha / New Delhi Jun 12, 2009, 00:27 IST |
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It is in the government’s own financial interest to eliminate all import duties for at least the next five years on digital set top boxes for both cable and direct-to-home sectors, the information and broadcasting ministry has argued.
It has made the point as part of a set of proposals to be given to the finance ministry in preparing the Union budget.
There will be a nearly seven-fold increase in the number of DTH and digital cable subscribers, to around 82 million by 2013-14, if the current duty regime is brought to zero for five years, the I&B ministry says, endorsing an argument made by industry bodies. Which would mean a net revenue of around Rs 7,200 crore over that period.
Various bodies representing the DTH, cable and Multi System Operators have made this demand on digital set top boxes, an essential hardware for accessing DTH and digital cable services. The DTH and digital cable sector has witnessed its fastest growth in the past two years. From around four million subscribers in 2006-07, there are over 12.5 million subscribers of DTH and digital cable. This may cross the 80 million mark within the next five years if the duty regime is ended, say the industry bodies
Currently, the imported digital set top boxes attract a Special Additonal Duty (SAD) levied at 4 per cent and a countervailing duty (CVD) at 8 per cent. “Both should be brought to zero per cent for the next five years,” says the I&B ministry proposal. Most of the boxes are imported from China, Korea and Taiwan. Making these in India is expensive due to fluctuating input cost, say sources.
According to a senior executive in the DTH sector, under the current duty regime the subscriber base of DTH and digital cable platforms would increase to 42 million by fiscal year 2013, about half of what is estimated if the duties are removed.
According to the calculations made by industry experts, the reduction in CVD and SAD on boxes may result in a one-time revenue loss of Rs 210 per box. However, the recurring revenue benefit will be Rs 622 per year per STB to the government, which translates into recurring revenue of Rs 1730 crore per year, with additional penetration of the boxes in DTH and digital cable services.
“In other words there would be a revenue loss of Rs 1,428 crore over a five year period and a revenue gain of Rs 8,656 crore, resulting in an net revenue of over Rs 7,200 crore to the government over five years,” said an expert representing the DTH and digital cable industry, requesting anonymity.
Among other proposals, the I&B ministry has suggested categorisation of broadcasting as an infrastructure service so that the benefits and incentives applicable for the infrastructure sector could be extended here. The ministry has also proposed parity in applicability of service tax between broadcasting and print sectors, a reduction in the fringe benefit tax for media personnel from 20 per cent to 5 per cent, and removal of anomaly on duty levied on imported films and tapes, a senior official said.
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