 "Budget 2016-2017: Customs cut on set top boxes to help lower customer acquisition cost")
While the media and entertainment industry had some well-defined expectations from the Union Budget 2016-17, it was once again a tepid outing for the industry.
The simplification of the tax structure across sub-sectors like DTH, television etc. and granting DTH and cable industry infrastructure status were among the top requests from the industry. However, none were granted.
NP Singh, CEO, Sony Pictures Networks India says, “From an overall Budget perspective, the enhanced public spending through various social schemes and infrastructure investments should further help to expedite economic growth. The government has also balanced spending with fiscal prudence by reigning-in fiscal deficit. From a media industry perspective, there were no major changes. I feel that a change in the definition of industrial undertaking for the services industry as well as a push to define the GST roadmap would have been sector-positive.”
There were a couple of positives, however. The finance minister announced a reduction of 10% customs duty on digital head-ends and set top boxes. This is positive for DTH and cable companies. It will lead to lower set top box prices and hence lower capex and will help lower subscriber acquisition cost.
The other positive from the Budget came for the print players as the government has proposed basic custom duty exemption on newsprint. The government has reduced basic customs duty on wood in chips or particles for manufacture of paper, paperboard and newsprint from existing 5% to NIL. This means the cost of raw material will come down.
Currently, print companies import 25-30% newsprint.