Budget gives boost to local set-top box manufacturers

Domestic set-top box (STB) manufacturers such as Videocon plan to increase production, owing to an expected rise in demand for their products. This is because importing these boxes from abroad would become expensive following the move to raise customs duty from five per cent to 10 per cent.

Typically, STB users -"direct-to-home companies and digital cable operators -"import most of their requirement from countries such as China. But with Finance Minister P Chidambaram announcing an additional five per cent duty on imported STBs (through which it would garner about Rs 170 crore), companies such as Videocon say now, there would be a level playing field. "We have long been asking the government to incentivise the local industry in some way," said Aniruddh Dhoot, director, Videocon Industries and president of the Consumer Electronics and Appliance Manufacturers Association.

With capacity to produce about four million units a year, Videocon is the largest manufacturer of STBs in India. Dhoot said annual production might be ramped up to about five to six million units next year, as users were considering securing more STBs from local companies. (SET-TOP BOXES RIDE DIGITAL WAVE)

Three quarters of the 15 million STBs deployed last year were imported; the rest were sourced from local players. In the next few years, this ratio is likely to be 50:50, as local manufacturing gets a boost, say experts.

An executive from Dixon Technologies, which produces the MyBox brand of STBs (used by companies such as Dish TV), said, "The opportunity for domestic STB makers will lie in the switch users would make from imported to local boxes. This is the key."

Experts say the boost to local manufacturing could also goad more companies to step into the fray.

The move to boost domestic manufacturing comes at a time when the second phase of digitisation is underway. After viewers in Mumbai, Delhi, Kolkata and Chennai were asked to shift from analogue to digital TV signals last year, the government has now asked viewers in 38 cities across 15 states to do the same. The March 31 deadline for the second phase is likely to be extended, as cable operators struggle to achieve digitisation.

Basic STBs are priced at Rs 1,500-2,000, depending on the brand. STBs with added features are sold for Rs 3,000-4,000. Though the replacement cycle for STBs is said to be about three to four years, experts say it is difficult to monitor the quality of imported products, reducing their cycles by about a year.