 "Govt mulls raising FDI cap to 100% in DTH, cable networks")
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 of them were granted.
N P 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.”
Read our full coverage on Union Budget 2016
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 consequently lower capex and will help lower subscriber acquisition cost.
M K Anand, MD & CEO, Times Network said: “Digitisation, in my opinion is the most important factor for the broadcast sector currently, we are very happy about the excise duty changes proposed for Set Top boxes which will help in the last mile infrastructure of DAS (digital addressable system) 3 and 4. Overall, a stable and positive fiscal situation is good for the economy and that will support our Ad Sales growth projections. All in all budget 2016 looks good for the broadcast sector."
Sudhanshu Vats, Group CEO, Viacom18, and Chairman, National Media and Entertainment Committee, CII, said: “Kudos to the government for presenting a disciplined and inclusive budget. The emphasis on rural development and commitment to the fiscal deficit target augur well for the economy in the long-run. The proposal for a more conducive excise duty regime for STBs and other ‘entertainment-access devices’ is welcome. While many of us from the industry were anticipating more sector-specific announcements, I’m sure that this budget will benefit the larger economy and therefore, by extension, have a positive impact on our industry as well.”
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 around 25-30% newsprint.
The FM also proposed to amend the Finance Act, 1994 so as to declare assignment by the Government of the right to use the radio-frequency spectrum and its subsequent transfers a service, making the use and transfer of spectrum a service leviable to service tax and not sale of intangible goods.
Prashant Panday, CEO, Entertainment Network India Limited (ENIL), said in this regard: “We need to read the fine print on this. But it appears that future auctions of spectrum will result in the levying of service tax at the rate of 15%. However, this service tax will be 'set-offable'. If that is so, then there will be no increased tax burden on ENIL. We will also need to see if this applies to spectrum sales between two companies, as and when that is allowed by the government.”
ENIL operates radio stations across the country under the brand name Radio Mirchi. The budget, however, made no mention of further phases of radio frequency auctions after the third phase concluded in the end of last year.
