STB customs duty threatens Indian pay-TV growth: CASBAA

MUMBAI: The Cable and Satellite Broadcasting Association of Asia (CASBAA) expressed new concerns over the recent Indian government levy of additional duties on imported set-top box (STB) or cable TV decoders essential in the country’s push for digitalization.

On 6 July, Indian Finance Minister Pranab Mukherjee announced the 5% customs duty on import of STBs, while reducing duty on LCD televisions from 10% to 5%.

The move on STBs, however, may prove detrimental for consumers who will now need to pay more for digital services such as DTH (Direct to Home satellite) and digital cable TV subscriptions.

"While the duty cut on LCDs is welcomed, in the short-to-medium term STB imports will be hit hard and service providers – generators of sizeable tax revenue for the government and employment for millions of Indians – will be forced to review their business models," said CASBAA.

The trade body estimates the number of digital homes in India is around 16 million out of almost 82 million cable TV connections. Indeed, digital cable TV growth in particular remains woefully slow. The most recent data released by the Telecom Regulatory Authority of India (TRAI) shows 13.09 million digital DTH subscribers and the growth of this relatively new DTH sector could also be hit by the new tax rates.

While lauding Indian entrepreneurship that has been a key to the development of the cable TV and broadcasting sectors into a multi-billion dollar industry, CASBAA notes that multiple taxation levels covering license fees, service taxes, entertainment taxes and VAT on installed equipment within customer premises often accounts for more than 50% of costs to the consumer. "This is more than unhelpful for a sector that underpins India’s digital strategy," said CASBAA.

CASBAA also believes the government has failed to give full recognition to the broadcast and cable sectors as demonstrated by the on-going disparity between the government approach to the telecoms and broadcast sectors.  Imported telecoms equipment is exempt from basic customs duty. However, the basic duties for imported head-end (i.e. switching) equipment for cable TV and satellite TV systems vary from 7.5% to 10%.

In light of Prime Minister’s Office (PMO) policies intended to rapidly digitize broadcast services, and regulator TRAI’s strong recommendations on digitization, CASBAA reckons "tax concessions are essential if digitalization is to receive a fresh impetus. Without doubt, uneven taxes deliver uneven results".

According to CASBAA CEO Simon Twiston Davies , "The broadcast industry still needs government support in the form of a reasonable (and reasoned) tax environment if it is to grow further." Only then can Indian media and communication companies truly deliver genuine choice at a genuinely competitive market price.