Waiting to Exhale

Union Budget leaves Indian media and entertainment industry disappointed

Written by Anushree Chandran | Mumbai | Published:August 1, 2014 1:00 am
Representational pics Representational pics

By Anushree Chandran & Anindita Sarkar

The union Budget 2014 has left most in the Rs. 91,800-crore media and entertainment sector disappointed. The overall growth for the sector has been erratic for the first few months of 2014, and muted for most of 2013,because of the slowdown in the Indian economy. Most media and entertainment companies were expecting significant changes with this Union Budget and had huge expectations from the new regime, be it the push for cable digitisation, de-regulation in pricing of channels, tax waivers or implementation of new foreign direct investment (FDI) norms, as per the recommendations of the Telecom Regulatory Authority of India (TRAI). However, in his budget speech, finance minister Arun Jaitley opted to maintain the existing status quo, and proposed no major shifts.
Print remains exempt from service tax on sale of ad space, as has been the case in the past. The government announced the setting up of a 24-hour channel called Kisan TV with an outlay of Rs.100 crore, which will provide information to farmers on various farming and agricultural practices. It has also announced the launch of Arun Prabha channel, a television channel for the North East. The service tax, liable currently on sale of space and time for advertisements in broadcast media is now also applicable to online and mobile advertising.
One piece of good news for the broadcast sector is that electronic goods such as television sets and personal computers will become cheaper. Jaitley has announced a proposal to make cathode ray tube (CRT) TVs cheaper as well as encourage manufacture of LED and LCD panels of TVs. The basic custom duty on LED panels below 19 inches will be discontinued. CRT TVs have also been exempted from custom duty. Sudhanshu Vats, chairman of CII National committee and group chief executive of Viacom18 group said that the finance minister had the unenviable job of meeting the expectations of an entire nation. “Personally, I think it’s a commendable budget grounded in pragmatism while setting the pace for course correction. At a sectoral level, the announcements pertaining to the setting up of a National Institute of Animation, a nationwide incubator programme, zero customs duty on LCD and LED panels (less than 19 inches), allocation of funds for community radio and the launch of Arun Prabha and Kisan TV channels are well-intentioned,” said Vats. He added that there is still a need to look deeper into the issue of service tax applicability on broadcast and digital transactions. “Some of the changes required by our industry are systemic in nature and cannot be addressed in a single policy document. All in all, I see this as the beginning of a new phase of 7-8 per cent growth over the next few years with a pro-active, inclusive and open government at the helm of affairs,” Vats added.
Tarun Katial, chief executive of Reliance Broadcast Network, seemed largely disappointed with the Budget. “With not much for the media and entertainment industry in the Budget, there would be anticipation of a further announcement in line with the policy initiatives, especially for the radio sector. On the television front, the ruling on custom duties for LCD and LED televisions being completely scraped to nil,as compared to the earlier 10 per cent will result in a significant boost in the consumption of the television sets,” he said. Ashit Kukian, president and chief operating officer, Radio City 91.1 FM also expressed disappointment with the lack of policy shifts for private FM. “We would have liked the government to take steps to increase the FDI limit to 49 per cent from the current 26per cent.With Phase III auctions awaited, the increase in FDI limit would have opened the doors for fresh investment giving that much-required boost to the radio industry,”said Kukian.
Commenting on the allocation of Rs.100 crore for community radio stations, Smita Jha, leader – entertainment and media, PwC India said that the budgetary allocations are welcome, though the sector policies needs re-visiting to ensure the viability of these stations on a long-term basis. Service tax is also now being levied on online and mobile advertising—a move that has not gone down well with this sector. According to Dippak Khurana, chief executive and co-founder at Vserv.mobi, the budget reflects differential treatment as traditional print media remains unaffected with respect to the tax purview, but new digital media will have to bear the brunt of the service tax. “While the budget is in favour of small-scale set-ups and entrepreneurs, the provision of taxation is contrary in nature for budding developers and publishers,” he said.

 

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