Govt plans push for local cable equipment manufacturers

Regulation to mandate operators to buy at least 30-40% of STBs made in India

The Centre is all set to bring the acquisition of cable equipment, including set-top boxes (STBs) and digital head-ends, under regulation to make it mandatory for the 70,000-odd cable operators and over 6,000 Multi-Service operators (MSOs) to acquire at least 30-40% of STBs made in India.

Currently, around 90% of STBs and other cable equipment are imported from countries such as China and Taiwan as they are cost-effective. Also, the local manufacturing capacity of Indian manufacturers is not in a position to support the fast-paced requirement of the industry, which is seeding more than 18-20 lakh STBs every month.

The move is expected to boost the fortunes of Videocon Industries, the only home-grown manufacturer of STBs in large volumes. According to industry sources, Videocon has the current capacity to annually produce 40 lakh STB, which will now be ramped up to 60 lakh units by 2014.

Sources said the Centre is working on the details of the direction that will come into effect in the third and fourth phases of digitization, which will covers cable consumers in municipal areas and the rest of country. The first and second phases covered around 25 million subscribers across 42 cities where accessing analogue cable signals is illegal now.

The Centre wants to encourage local manufacturing of STBs and had spelled out its plan in this year’s general Budget on February 28, where finance minister P Chidambaram increased the customs duty on imported STBs from 5% to 10%.

“We want to encourage domestic manufacturing of set-top boxes (STBs). Until the industry is asked to buy it from local manufacturers, domestic manufacturing will not get a boost. We are going to make it mandatory for cable operators to buy at least 30-40% of the STBs from Indian manufacturers in the phase-III and phase-IV of digitisation,” U K Varma, secretary, I&B ministry, told FE.

The DoT has already accepted a similar proposal for the telecom sector. Starting this year, telecom operators are required to acquire around 60 security sensitive equipment like SIM card, modems, routers, leased-line equipment among others from Indian vendors. The department of information technology has also notified a similar proposal that mandates 30% value terms for all government procurement to ‘Made in India’.

With a 5% increase in taxes on imported STBs, the government expects to earn taxes under R200 crore in FY14.