ITV

Category: Hardware

  • STBs apart, industry feels left in the cold

    STBs apart, industry feels left in the cold
     

    NEW DELHI/MUMBAI: While the 2008-09 budget has largely left the media and entertainment industry untouched, Finance Minister P Chidambaram announced some measures that are expected to benefit the cable, direct-to-home (DTH) and IPTV growth in the country.

    Mixed bag for DTH, Cable

    Dish TV MD Jawahar Goel feels the DTH industry has something to feel positive about. “At present there is zero duty on import of set top boxes. Now the Finance Minister has also removed duty on import of specified parts of STBs. This will provide leverage and opportunity for DTH players to evaluate the option of manufacturing STBs locally,” he says.

    Tata Sky MD and CEO Vikram Kaushik, however, doesn’t agree that there is too much for the sector. “The benefits are so insignificant that the impact will be almost homoeopathic,” he says.

    There is only a relaxation on some of the components for manufacture of the STBs. “We had expected much more, especially significant reduction on excise duty, which has been denied us,” Kaushik adds.

    The issue of double taxation, with the entertainment industry having to pay both entertainment as well as service tax, has been left unchanged.

    Goel, however, gives a more detailed rationale behind being upbeat. He argues that since the CVD (countervailing duty) is reduced from 16 per cent to 14 per cent, the cost of the Consumer Premises Equipment (CPE) will go down and will benefit the DTH operator who are already providing considerable subsidies to consumers.

    The new provision introduced by FM in Service Tax, stating that any item being provided under the “Right to Use” to the customer but not covered under VAT, will now be covered under ‘right to use.’ This is a move towards the Goods and Service Tax (GST) regime, Goel points out.

    He says this will partly address the issue of multiple taxation on the DTH industry, where presently along with the service tax, VAT was also being charged on the CPE, though these were being given on rental or lease models.

    “This will help the DTH industry to give more options to the consumers to acquire the CPE on rental, which has been stipulated by Trai in its Quality of Service requirements. It will benefit the industry by taking the CENVAT credit of the service tax paid, thus positively impacting the cash flow of the capital intensive businesses,” Goel says.

    The multi-system operators (MSOs) are more cautious. Says Hathway Cable and Datacom MD and CEO K Jayaraman, “It is too early to see how the STB vendors respond to the duty waiver of some components and set up manufacturing bases in India. This will succeed only if the foreign vendors start producing here. Local manufacturers will also feel encouraged but they have to comply with the conditional access vendor.”

    The MSO Alliance is not happy with the way the demands of the industry have been ignored, especially on the issue of rationalisation of taxes.

    Says MSO Alliance secretary Avnindra Mohan, “There is marginal benefit on some STB components; it would be of some use only when Indian companies start producing STBs on a large scale. As it is, 90 per cent of the STBs are being imported today,” he holds.

    The Cable Operators Federation of India (COFI) is deeply dissatisfied with the budget, saying there is nothing in it for the local cable operators.

    Says COFI president Roop Sharma, “There is no provision of making digital headends cheaper. The marginal help to STB manufacturing would only be good for the DTH players and also of IPTV. But there are only 500000 STBs in the Cas (conditional access system) notified areas. So it hardly makes any difference to us. What the cable industry needed was incentives for digital headends.”

    Broadcasters feel digitalisation should get the push

    Broadcasters, on the other hand, feel the budget is positive in what little it has to offer. Says Star India CEO Uday Shankar, “The incentives provided for STB manufacture is a welcome sign. In fact, anything that goes towards digitalisation is good because this country is a victim of choked distribution pipes on analogue systems.”

    Agrees Global Broadcast News joint MD Sameer Manchanda, “The government has done something for the STBs and also for the convergence equipment. Since this is good for digitalization, it is also good for us as broadcasters.”

    Sums up INX Media founder and CEO Indrani Mukerjea: “The budget has provided an impetus for growth to the Digital revolution – by reducing the duty on certain specific components of STBs to nil. I am also happy that duty on convergence products related to the media and entertainment industry has been halved. Of course, I wish there had been a reduction in corporate tax rates for the industry too.”

    Film industry feels left in the cold

    The film industry has mixed feelings. Speaking for the multiplex operators, E-City Ventures MD Atul Goel has this to offer. “The impact on the entertainment industry would be limited, except for the customs duty reduction on equipment from 10 per cent to 5 per cent. However, we are happy to note, from the Cenvat reduction, that there is a direction towards convergence of indirect tax rates from the existing inefficient regime. We sincerely hope that the Empowered Committee of Finance Ministers recommend a substitution of entertainment tax levied on cinemas with GST (to be rolled out by 2010).”

    Prime Focus CFO Nishant Fadia feels the Indian film and entertainment industry should have liked special tax concessions and a reduction in corporate tax. But, on the positive side, he says, reduction of CENVAT in import duties and customs duty on equipments are steps in the right direction.

    Nothing for FM radio

    FM broadcasters feel the budget has nothing specific to offer to spur the sector’s growth. Says Big FM COO Tarun Katial, “The service tax needed to reduce, especially since the radio industry is at its infancy and has great employment and media opportunities in the semi-urban and rural markets.”

    Radio City CEO and AROI president Apurva Purohit believes reduction in base rate of excise duty from 16 to 14 per cent is positive for the industry overall. But there is little for the sector. She says, “Development and supply of content for use in advertising purposes has been brought under service tax net. This is likely to see an increase in advertising cost bringing a slowdown in advertisement revenues to broadcasters and print media which will ultimately be passed on to the consumer.”

  • Budget 2008: IBF wants no customs duty on STBs

     

    NEW DELHI: The Indian Broadcasting Foundation, the largest body of television channels in the country, has urged the Finance Ministry to exempt CVD, cess charges and additional duty on set-top boxes (STBs) for the next 10 years.

     

    Digital cable TV would get a boost if STB prices fell, IBF said.

    In a pre-budget memorandum presented to the Revenue Secretary and other senior officials in the Ministry recently, the IBF has also demanded that the concessions given to the IT industry should be extended to broadcasting, particularly in view of the convergence of technologies.

    For example, as of now, customs duty, CVD, and cess for broadcast equipment put together is 36.64 per cent whereas it is only 21.32 per cent for computers and 4 per cent for cell phones.

    The Foundation says that it is the most heavily and unfairly taxed Industry.

    Apart from service tax, states impose very high, even up to 35 to 40 per cent entertainment tax as also sales tax, stamp duty etc.

    The base of the fringe benefit tax for the broadcasting industry has been kept at 20 per cent whereas the base for six industries including computer software industry is only 5 per cent.

    The IBF says that the total service tax at 12.36 per cent on the total television media advertising revenue of Rs 74 billion works out to Rs 9.15 billion. Of this, the service tax liability of Doordarshan is Rs 1.01 billion and that of other channels is Rs 8.14 billion.

    Of the total ad revenue, the share of Doordarshan is Rs 8.18 billion and private channels is Rs 65.82 billion.

    The customs duty should be zero to make STBs affordable to consumers and no excise duty to encourage indigenous production of STBs.

    The government should exempt the broadcasting industry from service tax as in the case of print media, the IBF says.

    The government had in March 2005 granted exemption to the service providers (small cable operators) whose aggregate value of taxable service for a financial year does not exceed Rs 400,000. There was need for a clarification that the exemption granted is only in respect of service tax payable on services provided and does not extend to service tax charged on services procured by cable operators. Cable operators, thus, are liable to pay service tax charged by broadcasters and multi-system operators (MSOs).

    In this regard, the service tax authorities may be asked to launch periodic campaigns to ensure that all last mile cable operators are registered and display their registration certificates prominently.

    In view of the fact that broadcasting is included in Entry No. 31 and is being treated as a “Service” under Entry No. 92 C of List I of Seventh Schedule of the Constitution, the state and union territory governments may be directed not to levy entertainment tax, sales tax, etc. on the broadcasting industry inclusive of distribution services.

    There was need to expand the definition of Industrial Undertaking under Section 72A of the Income Tax Act, 1961 to include Electronic Media, that is, TV Broadcasting.

    In order to enable cable operators invest in infrastructure for achieving time bound digitalisation, a “National Fund” may be created to provide soft loans etc.

    Television industry is the electronic version of the print media providing information, entertainment and education to the citizens of India. Though service tax is levied on Broadcasting media, print media is not attracting service tax even though it enjoys a larger share of advertising revenue.

    According to the IBF, The total estimated advertisement revenue for 2006-07 was Rs 164 billion of which 55 per cent was generated by the print media (Rs 90 billion) and 45 per cent by TV channels (Rs 74 billion).

    The Ad spend to GDP ratio for India is one of the lowest at 0.34 per cent. It is 1.3 per cent for USA, 1.0 per cent for Australia and even neighbouring countries in South East Asia like Malaysia, South Korea, Singapore etc enjoy a high ratio of 0.8 per cent to 1 per cent.

    Without government’s support like service tax holiday on advertisement revenue, the potential cannot be exploited to the desired extent. Service tax pulls down consumption and hence economic growth. Lower consumption means lower overall tax revenues.

    As a result of the service tax, even the public service broadcaster Prasar Bharati will have to increasingly depend on Government grants while private TV channels (particularly news channels) will have a hard fight to survive, the IBF points out.

    At the outset, the IBF points out that there are 122 million Television homes in India and more than 71 million homes are connected to Cable & Satellite TV and these are increasing rapidly.

    The industry produces approximately 6,00,000 hours of original programming annually for more than 300 TV Channels making it one of the biggest in the world.

    There are over 56 million viewers of Indian television programming in neighbouring countries and overseas, creating a positive international image of India unlike any other media.

  • Budget, latest notifications push up STB production, broadcasting costs

     

    NEW DELHI: The measures suggested in the budget proposals for 2007 and the latest government notifications issued on 1 March, will not only make manufacturing of STBs dearer, they will also escalate manifold the price of broadcasting programmes.

    These are the conclusions, an exclusive analysis for indiantelevision.com by a senior tax expert on the matter have thrown up.

    The exemption from CVD has been withdrawn on specified parts of STBs, like tuners, RF Modulators and remote controls, according to Essel Group vice president and MSO Alliance leader Arvind Mohan.

    Mohan handles all the tax issues for the Esssel group.
     

    “Earlier, the exemption on CVD was granted by Notification No.21/2002-Customs. However, this has now been withdrawn vide Notification No.20/2007 March 1, 2007,” Mohan tells indiantelevision.com.

    Accordingly, he argued, now 16 per cent of CVD would be levied on the import of these parts. To that extent, the domestic production of STBs would become costlier.

    “It is quite surprising that though the CVD exemption benefit has been withdrawn from the specified part of STB, the exemption from levy of 4 per cent of Additional Duty of Customs in respect of cell phone parts, components and accessories, as was available only till April 30 2007, has been extended through the present budget proposals till June 30, 2009.

    “It is a clear-cut discrimination between the Telecom Industry and Broadcasting & Cable Industry,” Mohan says.
     

    Mohan shows also that the notification regarding the broadcasting sector would also shoot up their costs dramatically.

    Concessional rate of custom duty at the rate of 5 per cent was levied on the following items used in broadcasting sector vide Notification No.21/2002, on 14 major items. These are

    • Television cameras (with portable field video recorders (professional grade);
    • Audio recording equipment;
    • Tabletop post production video editing machines;
    • Four-source editing controllers to control editing machines;
    • Eight-channel video mixer/switches;
    • Special effect generators for fading and superimposing of text and graphics;
    • Time-base correctors/frame synchronisers;
    • Broadcast standard 3-D computer graphic systems;
    • Professional grade colour video monitors;
    • Portable lighting equipment with lamps for shooting in low light situation;
    • Professional-grade photographic cameras of all formats;
    • Darkroom equipment including enlargers;
    • Computer control editing machines;
    • And spares and accessories of above mentioned equipment as permitted by the Deputy Principal Information Bureau in the Ministry of Information and Broadcasting.

    However, these concession have now been withdrawn vide Notification No.20/2007-Customs. Accordingly, now the basic custom duty at the rate of 10 per cent shall be applicable on all these items,” Mohan says.

    “Consequently all the related duties and taxes would also go up. What you must remember is that professional TV cameras, audio recording equipment, video editing machines, etc. are being regularly used by various channels, specially news channels in their day to day working. This move is likely to adversely affect all channels, including news channels.”

    He points out also that exemption from Customs Duty has been withdrawn on recorded magnetic films used for producing TV serials.

    These items will now attract peak rate of custom duty at the rate of 10 per cent.

    Similarly, the Excise Duty exemption on recorded video cassettes, U-matic tapes, Betacam, any similar format, etc. intended for TV broadcasting, has also been withdrawn and excise duty at the rate of 8 per cent has been imposed.

    “This move is also going to adversely affect the broadcasting sector,” Mohan argues.

    Despite announcements by the government and reiteration by the Telecom Regulatory Authority of India, on the initiative to introduce digitisation in all the major cities of India by 2010 (Commonwealth Games), no fiscal concession has been extended in order to catalyse the process, he asserts.

    “This is clearly contrary to the approach adopted by the government for expanding telecommunication services, which were duly-supported by a lot of fiscal incentives and some of these incentives are still continuing.

    “In order to create a level playing field between IT, newspaper and TV sectors, it is imperative that similar fiscal concessions are extended to broadcasting and cable sector also, to realise the objective of digitisation,” Mohan argued.

    He stresses that while no fiscal concession has been extended for digitization initiative despite the representations and recommendations of Trai and the information & broadcasting ministry, a lot of concessions have been accorded to the delivery of content to cinema in digital form namely, which he felt was also discriminatory action.

    As examples, he shows that digital cinema development projects have been notified as project imports under heading 9801 and will thus attract the project rate of 7.5 per cent customs duty.

    The services provided in relation to delivery of content of cinema in digital form after encrypting electronically have also been exempted from the payment of service tax.

    “Similar concessions are required to be extended for promotion digitisation of broadcasting and the cable sector.

    “World over, there has been a migration from analogue to digital regime as analogue is increasingly becoming obsolete. In all countries, various concessions in the form of subsidies, fiscal incentives, tax holidays for establishment of digital infrastructure are being extended by the respective governments, Mohan says.

    He clearly asserts that creditable role of the government in the process of digitisation, but says that if the targets are to be achieved in the stipulated timeframe at the national level, the necessary support to boost digitisation efforts is required to be extended by the government, as have been done in case of telecom sector.

  • Industry vents ire on ‘nothing budget’

    NEW DELHI: In the initial reactions to the 2007-08 budget proposals by Union Finance Minister, the media industry seemed distraught that none of the reliefs it has sought have been considered.

    “There is nothing we had hoped for,” a source in the Indian Broadcasting Foundation told indiantelevision.com. The source pointed out that the Sensex crash pointed to the sentiments of the corporate sector and the media industry could not feel otherwise.
    Both the major commerce and industry chambers, Federation of Indian Chambers of Commerce and Industry, as well as the Confederation of Indian Industry have, meanwhile, said they were disappointed with the budget.

    There were, however, indications, that the industry, especially MSOs would perhaps try and activate the government to meet with their demands in the ensuing period of debate on the budget proposals

    One major news channels told this correspondent that the major thing they had proposed was reduction of customs duty on STBs and components for producing them indigenously, but hopes had been dashed.

    Said India TV CEO Chinatamani Rao, “What could one react to? The IBF had on behalf of the broadcasting industry given several suggestions and nothing has been done on those issues. There is nothing in the budget for the entartainment or broadcasting industry. At best, you can say it is a neutral budget.”

    However, Big 92.7 FM COO Tarun Katial, struck a less strident note when he said, “Reduction in the customs duty works in the favor of business houses. The service tax however needs to reduce… especially since the radio industry is at its infancy and has great employment and media opportunities in the semi-urban and rural markets.

    “Local retail advertisers are at the bottom of the pyramid and they should not be subject to service tax, especially if they have to be enabled to compete with other established / larger players. The benefits that the budget brings to the agricultural sector is very good and with our network spreading across the country and reaching out to 50,000 villages, it is sure to be good for business.

    “Extending FBT on ESOPs requires some analysis and the additional 1 per cent cess on all taxes is sure to burn a hole in some pockets.”

    Radio Mirchi CEO Prashant Pandey said, “There has been nothing specific for the radio industry in this budget. So while it is a growth budget and that is good news for advertising, that is the only thing which brings cheer. I dont think radio was looking at anything specific either. We had asked for a waiver of customs duty in our pre budget memorandum, so that was expected.”

    Arvind Mohan, senior executive vice president of WWIL told indiantelevision.com: “This is a dismal budget. There is nothing in it for us.”

    He opined that at best, the marginal reduction of tax burden on import of digital equipment could be seen as a s sort of a silver line.

    There has been no change in the customs duty for import of STBs, and the service tax, which had been sought to be done away with in this budget, has been slightly augmented, from 12.24 to 12.36 per cent, which is detrimental to the growth of the industry, Mohan felt.

    Stressing that he felt that the dividends distribution tax and the tax on share options for employees would also dampen industry spirit as a whole, Mohan said, “We shall take it up with Trai and also with the Indian Media Group, and lobby with the finance ministry and we hope the government will heed our demands.

    Roop Sharma, president, Indian Cable Operator‘s Federation, said: “Chidambaram wants complete digitalisation of cable TV before the 2010 Commonwealth Games, but what has he done for that? Nothing. I think they want the small industries like cable operators to die out, because they have given no tax holiday for us at all.”

    Senior Trai officials said that they had sent their proposals to the finance ministry some 25 days ago, and “by then the budget procedure might have got a long way through,” indicating therefore, that they were not happy with what has been proposed for the sector.

    The official said that due to certain reasons, he had not been able to look at the exact budget proposals, and would be ready to comment later only.

    Most observers, however, felt that there was nothing in this budget for the media and entertainment industry, but sought more time for giving more considered opinion.

    Trai had strongly proposed that customs duty on import of STBs and their components be reduced to Zero, and service tax be waived. It had called for rationalisation of tax structure to provide for a level playing field for the newspaper and electronic media, but that has not been reflected in the proposals by the finance minister.

  • Ficci faults increase in indirect taxes as wrong signal to corporates

     
     

    NEW DELHI: The president of Ficci, H Khorakiwala, I congratulated the finance minister’s “terrific budget” on the social sector front, but said he has lost an opportunity due to the indirect taxes imposed, which has given a wrong signal to the corporate world.

    He specially lauded increased spendings on health, education and agriculture, and also the GDP spending that has been raised.

    He said however that the corporate sector is not happy with the indirect and direct tax burdens, especially various instances of multiple taxation, and it would have been better had he taken measures to ensure keeping the growth rate at 9.2 per cent.

    Responding to a question, he refused to term this as an anti-growth budget, stressing that not that there will be no growth, but it would have been better had he taken this opportunity.

    He also said that the inclusive economic development is sustainable in the long term.

    There will be somewhat retardation in the IT sector due to the taxes imposed and this is a disappointment for the sector.

    Ficci Secretary General Dr Amit Mitra further clarified the body’s stand, saying that it is not as if the 9 per cent growth rate will slow down, because that has happened due to the private sector and corporates, as well as public participation, but the industry had expected something in the budget that would perhaps push the growth rate beyond what is there now, to 10 per cent.

    “That is an opportunity that the finance minister has missed and this is disappointing,” he said.

    Specifically on the IT sector, Mitra held the imposition of MAT is “too premature. The government could have done this when the IT industry would turn more mature, when we started dealing with imbedded technologies, rather than the preliminary technology we are dealing with now.

    He also said that the tax on stock options for employees is also a deterrent for the industry.

    “The government could have lowered taxes and asked for better collection and that would have helped industry, since the minister admitted that tax collection has increased. Instead, he imposed taxes, which is not the right thing.

    However, he said that the reduction of the fiscal deficit, “for the first time in 25 years, will help curb inflation, added with the benefits that the farm sector has been given, which lies at the core of inflation.

  • Rationalise excise duty, Vat on TV, STBs: Planning Commission
     

    NEW DELHI: Acknowledging that the major hurdle in digitization presently is the absence of digital receiver sets and the fact that about 45 per cent TV sets are Black and White, a sub-group of the Planning Commission has recommended rationalization of the total taxation level to 12 per cent.

    The sub-group on ‘Going Digital’ set up by the Planning Commission and headed by Rajeeva Ratna Shah, member secretary in the Planning Commission and a former CEO of Prasar Bharati, said this will mean the excise duty on digital TV set, set top boxes (STBs) and its inputs be rationalized to 8 per cent and there should be a state VAT of 4 per cent. This will give impetus to the indigenous STB industry, which would generate economic activity and employment in the country.
     

    The sub-group noted that STBs and the digital Conditional Access System (Cas) act as a catalyst for implementation of digitization. The Consumer Electronics and TV Manufacturing Association (Cetma) has indicated that the cost increase in case of a TV set, capable of receiving digital terrestrial signal in addition to analogue signal would be about Rs 1000 from the existing prices. For the existing analogue TV sets, which are expected to be around 120 million by year 2010, the consumers would need to have Digital Terrestrial Transmission STB to receive the signals. The cost of STB is presently about Rs 2250 and is decreasing every year by 7 to 8 per cent. 

    The industry would require a lead time of six months to meet the demand for the digital TV sets and radio receivers. Similarly, the industry would be in a position to provide STBs in about 16 to 20 weeks from the time the government decides to change over to digital broadcasting.
     

    “But for successful rollout, the government needs to firm up the transition path and announce timelines so that all the stake holders could put their acts together and make the transition as smooth and successful as possible. The success of DTT depends upon the availability of requisite consumer end equipment and introduction of STB coupled with Cas.”

    The sub-group added that India was a price sensitive market and one solution or product fits all cases is not commensurate with consumer thinking. Hence there may be need to introduce various models of STBs (having digital to analogue converter with addressability of channels with Cas to high-end models) with increasing value added features to meet the requirements of the consumers. The requisite standards need to be put in place for this. 

    Out of 61 million households cable connections all over India , 35 per cent are in rural areas. This service is easily available and affordable in the rural areas. This industry is geared up to meet the challenge of digital broadcasting, the sub-group noted. 

    At present, the signals from uplink station to satellite and from satellite to cable TV head-end are already digital. The signal from cable TV head-end to subscriber is both in digital and analog format. Most of the multi-service operators (MSOs) in the metros and big cities have already gone digital. Thus, only 7000 head-ends required to go digital.
    Furthermore, all franchisees are not affected by digitization as they only pass the signal (analog/digital) received from the head-end to the subscribers and do not process the signal. Digitization of subscribers end depends on introduction of digital TV in the market at affordable prices and immediate digitalization of cable TV head-end. 

    To further galvanize the rollout, all the content producers – Prasar Bharati as well as private operators – should provide agreed and identified channels in the digital/HDTV format to MSO/cable operators under the “Must Carry” clause. 

    Going digital encompasses digital broadcasting, telecom as well as other technologies for access and backbone networks which deploy digital systems. While some of the frequency bands used for broadcasting have exclusive allocations for ‘broadcasting’, most of the bands are shared with other services. 

    For example, the 800/ 900 MHz bands used for cellular services – GSM & CDMA, etc. are available for broadcasting also. The satellite based TV broadcasting is mostly in the frequency bands, which are shared with microwave systems. Hence, while evolving/ modifying the NFAP (National Frequency Allocation Plan), the relative national priorities of various spectrum based services have to be taken into account.

    Normally digital transmissions require larger bandwidth. However, with modern compression techniques, which are improving continuously, it is now possible to accommodate multiple channels in the RF bandwidth of a single existing (analogue) channel. Hence, on complete transition to digital systems in broadcasting, the spectrum requirements should reduce or alternatively, it would be possible to transmit larger number of channels in the bandwidth occupied by existing channels. 

    During the transition phase, existing analogue and new digital systems would need to be broadcast together, requiring larger spectrum bandwidth. The requirements can be assessed once the number of channels for simultaneous transmission is worked out. With digital broadcasting, it is possible to include data, Internet, etc. within the broadcasting channels. 

    During the migration from Analogue to Digital Radio, new frequency assignments have to be identified to facilitate smooth migration and for some time both the existing analogue transmissions as well as new digital transmissions would continue. Hence, there will be spectrum constraint during this transition phase. Also, the spectrum for digital migration may need to be identified for both Prasar Bharati as well as Private FM Broadcasters. 

    The sub-group, comprising 17 members, was set up by the Committee on Information, Communication and Entertainment (ICE) that has been examining the larger issue of convergence and advent of modern technology. Members include the secretaries in Information and Broadcasting and Department of Telecommunications, the Prasar Bharati CEO, the presidents of Cetma, Mait, Nasscom, and ISP Association of India, co-chairman of the Ficci entertainment committee Kunal Dasgupta, chairman of the CII entertainment committee, chairman of the Film & Television Producers Guild of India, president of the Cable TV Operators Association, Rajiv Mehrotra who is the managing trustee of the Public Service Broadcasting Trust, Virat Bhatia from AT&T Communications Services, Zee Telefilms President Abhijit Saxena, Sameer Rao who is vice-president in charge of strategy, planning & regulatory in Star India, and a representative of the Prime Minister’s Office.

  • Zee Turner: Budget should stop double taxation from broadcasters
     

    NEW DELHI: Broadcasters have expressed the hope that the government will ease the taxation structure for the initial three to five years and introduces policies that promote domestic manufacturing of set top boxes because the high import duty and taxes like octroi and other taxes were acting as a bottleneck in smooth transition to digitalisation.

    Zee Turner CEO Arun Poddar told indiantelevision.com today that irrational rates were dissuading Indian entrepreneurs from investing in the production of STBs. He hoped the government would introduce policies that promote domestic manufacturing of STBs.

    Listing his expectations from Union Budget 2007-08 being presented on 28 February, Poddar appealed for doing away with double taxation from broadcasters. He said since media was part of the entertainment as well as a service industry, broadcasters were charged both entertainment tax and service tax.
     

    He said the entertainment industry was in the transition mode from analogue to digital and it was extremely imperative for the government to take steps that not only accelerate the process but also make this industry an interesting and appealing investment proposition for Indian manufacturers.

    Service tax remained one of the crucial and unresolved issues in the entertainment industry and should be sorted out in the forthcoming Union budget. While service tax is levied on the electronic media, the print media is exempted from any such taxation. This is despite the fact that both print and electronic fall under media and entertainment industry. There was therefore need to create a level playing field for all, and take measures to bring electronic at par with print media.
     

    “The 400,000 exemption limit from service tax has led to ‘appalling confusion and dissatisfaction’. While the last mile cable operators are able to take undue advantage of this exemption limit, multi system operators (MSOs) and broadcasters were being penalized,” Poddar said. The last mile cable operators conveniently avoid passing the service tax to MSOs by under declaring their subscriber base by almost 80 to 85 per cent. MSOs and broadcasters paid service tax but could not recover this from the last mile operators.

    He expressed the hope that the government would bring about clarity on how service tax should be charged or should waive the exemption limit completely.

  • CII moots 5% customs duty on imported STBs in bid to boost local manufacture

     
     

    NEW DELHI: While demanding various reductions and exemptions of taxes and duties that would be beneficial for the media and broadcasting industry in general, the Confederation of Indian Industry (CII) has demanded a hike in customs duty on STBs from the present nil to 5 per cent.

    The CII has demanded exemptions and tax burden relief on capital goods import and other issues, especially those meant for infrastructure development, creation of intellectual property and import of colour TV and picture tubes.

    Yet, so far as STBs are concerned, the CII says that whereas in the present situation, import of STBs do not attract any customs duty, this should be raised to five per cent in the budget for 2007.
     

    The CII, in its document “Pre-Budget Memorandum” gives its own arguments on that count.

    It says: “Excise Duty on STBs was exempted on 24th June 2003 to facilitate introduction of Conditional Access System in the country. In the budget 2006, the exemption on excise duty was withdrawn but customs duty was reduced from 15 per cent to Nil. However, there was no corresponding reduction of customs duty on inputs used in the manufacturing of STBs. This has resulted into another case of inverted customs duty structure.

    “The correction of the anomaly can be achieved either the by reduction of customs duty on inputs required for manufacturing of STBs to Nil, or increasing of customs duty on the import of STBs from Nil to 5 per cent, and also allowing import of inputs at five per cent.”

    A senior tax consultant told indiantelevision.com that the measure would benefit local manufacture of STBs, as the customs duty on import of boxes and import of input components would be the same, whereas previously, there was no customs duty on import to STBs.
     

    Currently, MSOs are importing STBs mainly from China and Korea.

    “This is a pro-local manufacturing and necessary corrective measure from an earlier skewed customs regime so far as STBs are concerned,” he explained.

    The CII recommendation says that the second option is preferable.

    It says also: “In case it is felt that it would increase the price of imported STBs, then excise duty can be reduced from 16 per cent to 12 per cent on STBs as well as its major imported inputs.

    Meanwhile, there are many general recommendations of the CII that would benefit the industry.

    It has specifically suggested that the customs duty on glass parts of the colour picture tubes for TV sets should be reduced from 12.5 per cent to five per cent.

    It has argued here that the Free Trade Agreement between India and Thailand has a list of goods covered by the Early Harvest Scheme and includes CTV and colour picture tubes.

    “Consequently, customs duty on CTV (8528 12) and CPT (8540 11) imported from Thailand was reduced to 12 per cent on September 2004, and to 6.25 per cent on September 1, 2005. The impact of (this) reduction has resulted in tremendous increase of imports (from Thailand).

    On the telecom sector the CII has recommended that there should be a reduction of customs duty to five per cent on capital goods required for manufacture of telecommunication equipment covered by the IT agreement.

    It also wants to extend the present “Nil” customs concession to inputs for the manufacture of components / sub assemblies duty under serial number 239 of customs notification 21/2002.

    Across the board, CII has recommended measures that will benefit industry as a whole and consequently the media and broadcasting industry. It has, for instance, recommended reduction of CENVAT rate of 16 per cent to 14 per cent in the budget 2007, and has also said that the service tax of 12 per cent must not be increased.

    On the issue of infrastructure development CII has suggested that the government may consider more loans from international institutions.

    “Gross Capital Formation in infrastructure must be progressively raised from 4.5 per cent of GDP to 11 per cent,” the report of CII says.

    In general, all companies and employees may stand to benefit also if the CII recommendation of abolishing of Fringe Benefit Tax (FBT), in consonance with the desires of business as a whole, ever since the tax was slapped vide the Finance Act 2005.

    It outlines the alternative thus:

    “Either the tax should be abolished or the choice be given to tax paying firms to pay one per cent additional corporate tax on its total income in lieu of FBT. Otherwise the corporate could chose to remain under FBT. If this is not possible, the CII proposes levy of FBT only on elements of personal benefit to employees, and exclusion of deeming provision of treating a portion of pure business expenses as personal expenses.”

    The CII recommendation on depreciation would also benefit the media and broadcasting industry.

    Stating that it is well known that technology is changing fast, “and unless we are able to replace our assets fast, we cannot match with other countries in terms of productivity, CII has recommended that depreciation rate be raised from 15 per cent to 25 per cent, as was the case earlier, provided the rate charged under Income Tax is the same or higher than charged under the Companies Act.

    Development of infrastructure would also benefit from the industry body recommendation that the Minimum Alternative Tax is abolished. If it is not, CII feels, it should at least be removed for infrastructure companies in order to promote development and to motivate the private investor to come into this sector.
  • Dopod launches in India with convergent mobiles

    Dopod launches in India with convergent mobiles

    NEW DELHI: Dopod International Corporation, a leading PDA phone and Smartphone provider, today opened their India operations, setting up office in New Delhi. The company is launching here with three models that has convergent technology powered by Microsoft.

    Dopod also announced the appointment of Ajay Sharma as the Regional Sales Manager, Dopod Communications (India) Private Limited, to oversee its Indian operations.

    Sharma told indiantelevision.com “Initially, we are introducing three handset models – C800, C720 and 818Pro in India. These devices are aimed at providing the combined power of telecom and IT through a unique, convergent solution with Microsoft.”

    Sharma will manage Dopod International’s new office, serving as India’s first Regional Sales Manager, India, overseeing all marketing and business development activities in the region.

    Asked about the company’s investment plans in India, Sharma said: “Presently, we are just setting up a distribution base here to cater to the Indian market. In due course we will be investing a substantial amount in marketing and sales related activities”.

    The models being introduced are 818Pro, a GSM Quad Band PDA phone that enables users to communicate by voice, any place around the world; the C720W, which supports Bluetooth v2.0 w/A2DP & AVRCP, and USB 1.1 for charging and data transfer and also provides GSM Quadband with GPRS & EDGE & hi-speed WLAN access 802.11g.; and C800, which has a sliding QWERTY keypad and 5-way navigation button that “makes messaging a breeze”.

    The last also offers the “ultimate connectivity”, with Bluetooth v2.0 w/A2DP & AVRCP, and a USB port for charging and data synchronisation, and provides GSM Quadband with GPRS & EDGE & hi-speed WLAN access 802.11g.

    Company executives explained that Dopod have entered the Indian market late, after it has seen the expansion phase into the B and C class cities, and the Class A cities have matured into creating a large demand for convergent mobile phones.

    “Dopod International would offer sophisticated and innovative converged solutions to the Indian consumers, which would be at par with the best designs and trends prevalent internationally. The distribution of its handsets models in India would start through a strategic tie-up with National Distributor, Jaina Marketing & Associates,” Sharma said.

    Asked about the roadmap for the company in India, Sharma said, “In the first phase Dopod plans to make its handsets available to Indian customers in 10 cities: Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Pune, Ahmedabad, Surat and Chandigarh.

    Dopod International Corporation was founded in 2002, and has expanded rapidly, Sharma said.

    By the end of 2007, Dopod plans to set up operations in 25 cities in the country.Talking about the models on offer, Sharma said: “818Pro is designed simply to appeal to the no-fuss crowd. It is a light, small and futuristic device which comes in lifestyle design with incredibly enhanced features.”

    The machine packs a host of comprehensive connectivity options, including WiFi 802.11b/g, Bluetooth, Infrared, GPRS (on top of basic features like SMS and MMS), making it “an unparalleled choice for not only general consumers but also mobile business professionals”, Sharma claimed.

    Powered by the advanced Microsoft Windows Mobile Version 5.0, the 818Pro comes with a full suite of applications for viewing and editing files, like Pocket Word, Excel, Power Point, managing address book and e-mails like Pocket Outlook while allowing users full access to the Internet.

    In addition, the 818Pro also comes bundled with the WorldCard Mobile Business Card Capture Solution software. “This means users can now enjoy easy business card data input. All they need is to take a picture of a business card with the intelligent software and all their contacts are instantly captured, recognised, sorted and stored,” according to Sharma.

    Model C720W has a lean and mean design, Sharma said, adding that runs on user-friendly Windows Mobile 5.0 Smartphone operating system. “Windows Mobile 5.0 with DirectPush Technology allows you to instantly synchronise emails, calendars and schedules, and besides, you can access PDF, Word, Excel and PowerPoint documents allowing you to work even while on the go,” Sharma explained. It has a built-in 128 MB ROM, 64 MB RAM with persistent storage and a Micro-SD card slot, he added.

    Model C800 is the “slimmest PDA Phone with slide-out QWERTY keyboard”, but apart from that has all the features of C720W.

  • Mobile forum focuses on latest technology trends

    Mobile forum focuses on latest technology trends

    MUMBAI: Tmobile2win, India`s leading VAS enabler hosted its first mobile Monday forum in Mumbai last week.

    The meet was attended by more than 60 professionals and enthusiasts from the Music, Telecom, Media and IT industry.Mobile Mondays are small, informal meets arranged city-wise and every month.

    The key note address was given by Netcore Solutions India VP mobile products and strategy Veerchand Bothra followed by mobile2win CEO Gopala Krishnan. He started off by explaining the concept of Mobile Monday(MoMo) and outlining the agenda for the evening followed by a presentation on the mobile indusry in general and the latest trends in mobile technology.

    The theme for the event was The Mobile Music Market in India- Untapped revenue streams in urban and rural India. Key speakers were- Soundbuzz GM Mandar Thakur, mobile2win country head Rajiv Hiranandani, Universal Music MD Rajat Kakar, Hutch’s Shailesh Varudkar, and ABP head Internet and telecom Saurav Sen.

    Discussions ranged from wireless technologies to Piracy in the mobile music industry, entertainment offerings and value added services etc.

    Kakar says, “Mobile Value Added Services (Vas) represents a growing format for sale and promotion of Music. Universal Music Group, as leaders in the Music business worldwide, have both,the responsibility and the desire to shape the contours of this opportunity in our endeavour to reach out to our consumers. Indian mobile landsacpe is among the largest in the World and interventions early in the product life cycles will, hopefully, ensure a viable eco-system for all players in this domain.”

    Mr Rajiv Discussions ranged from wireless technologies to Piracy in the mobile music industry, entertainment offerings and value added services etc.

    According to Mr Rajat Kakar, MD, Universal Music India Pvt Ltd, “Mobile VAS represents a growing format for sale and promotion of Music. Universal Music Group, as leaders in the Music business worldwide, have both,the responsibility and the desire to shape the contours of this opportunity in our endeavour to reach out to our consumers. Indian mobile landsacpe is among the largest in the World and interventions early in the product life cycles will, hopefully, ensure a viable eco-system for all players in this domain.”

    Mr Rajiv Hiranandani, Country Head, mobile2win, says “Year 2006 is a landmark year for the Indian Mobile industry.The userbase has touched around 13 crore which is only next to China”. He further added, “Mobile Monday is an industry event and which is driven by the community, whose suggestions and co-operation makes it all possible. The forum give us a platform to discuss concerning issues related to the mobile VAS industry in a more open and informal manner”.

    Hiranandani says, “Year 2006 is a landmark year for the Indian Mobile industry.The userbase has touched around 13 crore which is only next to China. Mobile Monday is an industry event and which is driven by the community, whose suggestions and co-operation makes it all possible. The forum give us a platform to discuss concerning issues related to the mobile Vas industry in a more open and informal manner”.