E & Y Moots Anti-Piracy Umbrella Body, Tax Sops

The creation of a national anti-piracy umbrella body for film and music industries, limited tax exemption to income generated from film financing, an entry fee for FM Radio operations and revenue sharing with the government and the development of a pricing model between television channels and multi-system operators such as Hathway and Siticable, are some of the key recommendations made by the CII-Ernst & Young Report released today.

"If the roadblocks to growth like piracy, the lack of corporatisation and financing limitations are removed, the Indian entertainment sector has a potential similar to that of the software sector. Through the CII's EnterMedia platform, we hope to work out an action plan with the centre, the sates and industry for identifying the core issues and developing the necessary solutions," said Nawshir Mirza, director, Ernst & Young (E&Y).

The report draws attention to the recently privatised FM radio business. The report recommends that there should be one-time entry fee coupled with revenue sharing with the government which needs to be introduced as against the open auction bids invited last year.

The open bidding process also resulted in non-serious players entering the fray. The FM privatisation policy also needs to be revisited with regard to permitting more frequencies per circle thus permitting existing players to offer a bouquet of stations in one city and also considering allowing private players to air news and current affairs programmes.

Noting that piracy is perhaps the single-most critical threat to the film business, the CII-Ernst & Young report talks about setting in place both stiffer penalties and rigourous enforcement. For example, fines ranging up to Rs 25 lakh and imprisonment for five years for DVD, VCD piracy.

Further, the report recommends anti-piracy cells within the state police and the judiciary.

"Piracy does not hurt the industry alone, the government also loses revenue opportunities," adds Mirza.

The proposed national umbrella anti-piracy body would create enforcement cells in all sensitive states to work in close co-ordination with the anti-piracy cell of the state police. The national umbrella would need to be set up in a phased manner.

The paucity of institutional financing for film business is another impediment to growth. Despite recent RBI guidelines for film financing, financial institutions are still hesitant to lend. "Our experience shows that the corporatisation of the business namely professional management and accountability are critical to assure the film financing fraternity in India," added Mirza.

Rationalisation in entertainment tax structure is another recommendation in the report. Close on the heels of the film business, the report has also called for reforms in the television broadcast industry. In recent years, large multi-system operators (MSOs) like Siticable and Hathway have entered the industry by buying out small operators or by entering into joint ventures or franchise arrangements.