The Hindu Business Line : 5% Customs duty on set-top box disappoints multi service operators

New Delhi, July 6 The Budget proposal of imposing a five per cent customs duty on set-top boxes (STBs) has disappointed both the addressable cable and direct-to-home industry.

The additional cost per box could amount to about Rs 100-130 per box for the CAS or DTH consumer. While most DTH players import boxes or their components, the few domestic STB makers are seeing an opportunity in acquiring new clients.

The cost of the box alone, for digital cable and DTH ranges between $24 and $40 (or Rs 1,200-2,000) including the cost of the smart card.

“This is a serious setback to digitisation efforts; there are no makers of set-top boxes that meet industry requirements,” said Mr A. Mohan, Executive Vice-President, Essel Group.

Essel’s DTH business Dish TV expects to add 2.5 million new connections in the coming year. “While the Government talks of digitisation, may be it is no longer a priority of the Government,” said Mr Jawahar Goel, MD, Dish TV.

“The five per cent customs duty on STBs will add to the cost of digital television services for consumers at large,” said Mr Vikram Kaushik, MD and CEO, Tata Sky, which has 3.7 million connections.

The DTH industry has been complaining of its heavy tax burden totalling 40-43 per cent.

The reduction in 10 per cent revenue share to 6 per cent suggested by the I&B Ministry hasn’t come into effect.

However, this is good news for the latest entrant in the DTH sector, Videocon, which builds its own boxes. “We can now afford to pass on the margin, and will be looking to supply STBs to others,” said Mr Venugopal Dhoot, Chairman, Videocon Group.

According to Mr Dhoot, its Aurangabad facility has a capacity of 10 million STBs. Beetel sold 2.5 lakh STB’s for free-to-air DTH (offered by Doordarshan), cable operators and for broadcasters. According to Mr Sunil K. Goyal, CEO, Beetel, the company has already tied up with a technology partner and it expects to bring its box to the market by year end and hopes to acquire DTH clients.

Our Chennai Bureau adds: Mr Salil Kapoor, COO, Dish TV, said the additional burden of 5 per cent duty on STBs will hinder the growth and will discourage the DTH industry from expanding business; “this tax hike will be passed on the customers”. According to industry sources, DTH players who have already procured STBs in bulk quantities need not worry. For example, they said,

BIG TV had procured five million boxes well ahead of the Budget, and distributed only 1.8 million STBs so far. Hence, it has over 3.2 million boxes on hand; and the Budget proposal will not impact the company in the immediate future.