However, the proposed exemption of customs duty on finished set top boxes would partially undo this advantage enjoyed by local companies, feel industry players.
Jagjit Kohli, CEO, Siticable, pointed out, "The imposition of excise is good news for the domestic manufacturers of set top boxes. On the other hand though, customs duty on finished set top boxes made zero takes away the benefits given to local manufacturers."
He also stated that this would in effect help the DTH drive as most players import the high-end set top boxes into India.
Ashok Mansukhani, executive vice president, HTMT said, "The objective of STB reduction appears to be more towards pushing the DTH operators."
He added that TRAI had suggested various incentives for the cable television industry to enable digitisation of head ends, distribution plants and consumer premises equipment.
While cable operators agreed that taxes levied on STBs were essentially to drive the DTH platform, DTH players were of the belief that the impact would be marginal.
"Most DTH players import and manufacture some percentage of STBs, so the net effect should be very marginal," said a DTH player who did not wish to be named.
Jawahar Goel, additional vice-chairman, Zee Telefilms said, "Both cable and DTH services are service taxable, and hence imposition of excise will help local STB manufacturers. It will also help the digitisation process in line with TRAI recommendations. Direct-to-home operators will particularly benefit from change in the duty regime related to STBs. But there will be little immediate impact on the cable TV industry, which already has a big stockpile of boxes."
It was also pointed out that the trend of importing STBs would continue, at least in the short run, as high-end STBs could not be manufactured in India due to lack of infrastructure.
On the other hand, if cable operators pulled up their socks and were aggressive with the digitisation drive, the new tax regime could be beneficial for them too.
Kohli was quite confident that TRAI would take corrective measures with service tax going up.
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