India’s cable and DTH operators have reacted furiously to the news that India’s finance minister has levied a 5 per cent extra import tax on set-top boxes – raising the overall tax to 10 per cent. They are complaining that the tax hike could not have come at a worse time. Almost all STBs are imported, at the rate of some 1 million boxes per month, and the immediate demand to wrap India’s Phase 2 digitisation plan sees a total of some 15-16 million boxes needed.
India’s DTH players feel particularly annoyed. They say they already pay punitive ‘special’ taxes. TataSky’s MD Harit Nagpal told local journalists that the timing of the tax could not have been worse. “There is huge demand for STBs and there are no proven manufacturers of quality STB in the country,” says Nagpal. “We would love to buy indigenous STBs as it would save us from foreign exchange fluctuation, transportation, and import duty. However, the STB manufacturing industry is too small at this stage and we import majority of our STBs,” he adds.
Airtel’s digital TV CEO Shashi Arora, quoted by IndianTelevision.com, said the fresh tax would dampen enthusiasm. “I don’t know what the government is thinking, but this is a cost which we could have done away with. The industry imports 95 per cent of STBs as there are hardly any Indian manufacturers,” Arora stated.