Domestic manufacturers of analog set-top boxes will lose over Rs 100 crore (Rs 1 billion) as a result of the duty cut on imported set-top boxes from 50.8 per cent to 5 per cent.
The companies that have already been affected include Chennai-based C-Net Communication, Chandigarh-based Deltron and Noida's Catvision.
The local manufacturers had initial orders for 200,000-250,000 analog sets, while another 150,000-200,000 digital sets were to be imported or assembled.
The orders for analog boxes are valued at Rs 50-60 crore (Rs 500-600 million), for components at Rs 20 crore (Rs 200 million) and for head-end equipment -- boxes used at the cable operator's end -- at Rs 30 crore (Rs 300 million).
Substantial investments made by domestic consumer electronics manufacturers in plant and machinery are also under threat.
"Prior to the reduction in import duty, prices of local set-top boxes were 15-20 per cent lower than the imported ones. However, after the cut, they are 15-20 per cent dearer. We do not see any reason for investing in manufacturing lines," said Anoop Singh, chairman of the Consumer Electronics and TV Manufacturers Association's committee on the conditional access system.
If the government had reduced the excise duty from 8 per cent to 4 per cent and sales taxes from 8 per cent or 12 per cent to 4 per cent, the local analog sets would have cost around Rs 2,000 and the digital ones Rs 3,500-5,000, an executive of a Noida-based set-top box manufacturer said.
Singh said several other local companies like Bharti Teletech and multinationals such as Philips were setting up new lines and hoping to start manufacturing.
But their plans would be stalled till the duty differential was wiped out, he said, adding that 'otherwise, the multinationals would only resort to imports.'
Around a dozen firms in the country have set up new lines for manufacturing analog sets.
According to the Consumer Electronics and TV Manufacturers Association, these companies had orders for 200,000 analog sets worth Rs 50 crore (Rs billion) from several multi-system operators in the country like RPG, Hathway, Siticable or INCable.
The association is planning to take up the issue with the government and seek duty rationalisation to protect the interests of domestic manufacturers.
Singh said worldwide, even big brands like Philips, Motorola and Scientific Atlanta outsourced their manufacturing to third parties.
"At least 12 million sets of the total production of 20 million sets worldwide are outsourced. Why should the same not happen in India," he points out.
