CASBAA decries India taxes

Industry body concerned over duties on set-top boxes

NEW DELHI -- The Cable and Satellite Broadcasting Association of Asia expressed concerns Thursday over the recent Indian government levy of additional duties on imported set-top boxes, which are essential for India's nascent digital TV distribution sector.

Presenting the national budget on July 6, Indian Finance Minister Pranab Mukherjee announced a 5% customs duty on imported STBs, but reduced duty on LCD televisions from 10% to 5%.

“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," CASBAA said in a statement.

“Initially, the government had levied no duties on STBs to encourage digitization of the cable industry but this recent duty hike could be an obstacle for future growth," New Delhi-based CASBAA India executive director Anjan Mitra said in an interview.

The government's rationale for levying the duty is seen by observers as an attempt to encourage local production of STBs, which now are largely imported.

CASBAA estimates India has around 16 million digital cable connections out of almost 82 million cable TV connections. Recent data released by New Delhi-based autonomous body Telecom Regulatory Authority of India showed 13.09 million homes served by digital Direct to Home, a sector CASBAA feels could be hit by the new tax rate.

CASBAA also notes that multiple taxation levels covering license fees, service taxes, entertainment taxes and value-added tax on installed equipment within customer premises often accounts for more than 50% of costs to the consumer, adding that “this is more than unhelpful for a sector that underpins India’s digital strategy.”

The industry group also feels the Indian government is not treating the broadcasting and cable sectors equally with telecommunications, pointing to the fact that imported telecom equipment is exempt from basic customs duty, while basic duties for imported head-end equipment for cable and satellite TV systems vary from 7.5% to 10%.

“The broadcast industry still needs government support in the form of a reasonable (and reasoned) tax environment if it is to grow further," CASBAA CEO Simon Twiston Davies added.