Sending the right signals

Updated: Mar 1 2006, 05:30am hrs
Cable and DTH operators have reason to cheer this year. The finance minister, P Chidambaram, has rationalised taxes on set-top-boxes in the Union Budget. Basically, customs duty, which stood at 15 per cent, has been abolished, while excise duty has been levied at the rate of 16%. With this move, a long-standing demand of the cable industry has been met. Says A Mohan, senior vice-president of the Subhash Chandra-promoted Siticable, "This is a good development. It will boost the process of digitisation undertaken by cable operators. If you recollect the Telecom Regulatory Authority of India (Trai) had made recommendations on digital cable last year. The finance minister's current move is a shot in the arm for us if viewed from that context."

Trai, for the uninitiated, had recommended a national plan for digitisation of cable services from April 1, 2006 to March 31, 2010. The plan, which would coincide with the holding of the Commonwealth Games in New Delhi in 2010, said that digital cable services should be introduced in all cities/urban centres with a population of over one million. It also spoke of licensing the cable industry and rationalisation of import and domestic duties by April 1, 2006.

According to media analysts, the finance minister's move to rationalise excise and customs duties will pave the way for a level-playing field for both manufacturers of domestic and imported set-top-boxes. "Earlier," says a senior media analyst with a Top Ten agency, "Domestic set-top-box manufacturers had to pay an 8-15 per cent customs duty on components imported by them. This obviously increased the cost of production, and thereby, the final price of the boxes. Now, both domestic and imported set-top-boxes will be competitively priced.