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Update Indian STB tax takes effect - 22-July-2009, 11:11

Indian STB tax takes effect

Rose Major

Indias decision to impose a 5% import duty on foreign-manufactured set-top boxes is already having an effect, with leading DTH platform Dish TV raising its set-top box prices by Rs100 and at least two competitors expected to do the same.

A statement from Dish TVs chief operating officer, Salil Kapoor, portrayed the tax as the last straw for the company.

The business model of DTH is based on subsidy and the component cost has also gone up considerably due to the rise in the dollar exchange rate in the last one year, Kapoor said. We have tried to minimise the effect on consumers by absorbing these rising input costs over the year, but the trend is on a constant rise and we have reached a level where absorbing the entire cost internally seems to be a tough proposition.

Tata Sky is also raising the cost of its set-tops, with Sun Direct considering following suit. Both are citing the new tax as the reason for any increase.

Last week, the Cable & Satellite Broadcasting Association of Asia warned that the new duty on set-tops may prove detrimental for consumers and noted the heavy tax burden on Indias TV platform operators.

Others may see the operators price rises as the chance for them to raise prices while being able to pass the blame on, however.

Only one DTH player, late-entrant Videocon, is unlikely to raise its prices to accommodate the new tax. Videocon manufactures its own set-tops, and may well start acting as a supplier to other platforms, should they be keen to avoid at least some of the new charges.

The Indian government had hoped that imposing the extra tax would help develop the domestic manufacture of set-top boxes, particularly by giving domestic players scope to add extra functionality to compete with imports.

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