Faced with criticism on the high costs of conditional access system, the government on Thursday slashed the import duty on set-top boxes by about 45 per cent, but CAS continues to be mired in a political controversy. The import duty cut is valid only till July 31.
This comes even as majority of members of a Parliamentary Standing Committee demanded deferment of the July 15 implementation of CAS in the four metros expressing apprehensions over the availability and affordability of set-top boxes.
A finance ministry notification reduced the basic customs duty on STBs from 25 per cent to five per cent besides dispensing with 16 per cent countervailing duty and four per cent special additional duty.
"It works out to a reduction by 45 per cent in duty. This means a STB costing Rs 4,000 would now be Rs 2,700," said Information and Broadcasting Minister Ravi Shankar Prasad who has been directed by Prime Minister Atal Bihari Vajpayee to ensure that CAS is consumer-friendly.
The finance ministry notification stated the government will revert back to the old duty structure from August 1, but Prasad did not rule out extending the deadline for the duty cut saying, "I cannot comment on it now."
Asked why the cut was only till July 31 giving consumers only two weeks from the date of implementation, he said, "We want it to be consumer-friendly while allowing Indian enterprises to grow."
Meanwhile, Central Board of Excise and Customs chairman M K Zutshi said the cut was for a limited period as the government expected the domestic manufacturers to come out with STBs in the market.
While one estimate put the revenue loss at Rs 700 crore (Rs 7 billion), Zutshi was non-committal saying it depended on how many STBs were imported. Also the revenue loss would be more than made up through excise collection when domestic production begins.
He said the cable operators, who have been evading service tax, would now come under the tax net with the installation of STBs as their monitoring would become easier bringing in more revenue.
Meanwhile, most members of the Standing Committee on IT and Communications, which met under the chairmanship of Somnath Chatterjee, asked the government to defer CAS, sources said.
The representatives of political parties, including the Bharatiya Janata Party, expressed apprehensions about the consumer response to CAS and asked the government not to hurry with it.
The sources said information and broadcasting secretary Pawan Chopra, who was present at the meeting, said the members concerns would be conveyed to the minister.
Prasad has appealed to all stakeholders to focus on consumer interest and said the government may even take appropriate legislative measures if necessary.
Set-top manufacturer, Motorola, welcomed the duty cut but said, "The reduction till July 31 is for a very short period for consumers to avail of the benefit since the deployment is going to take longer to attain significant penetration."