RESEARCH IT  >>  INDIAN ECONOMY  >>  BUDGET 2002

Media Sector

Budget Measures
  • Convergence Bill would be introduced in the current session of Parliament
  • Service tax on broadcasting services
  • Foreign telecasting companies brought under the tax net
  • Import duty on cinematographic equipment reduced from 25% to 15%

    Budget Impact
  • Both cable operators and foreign telecasters such as Star TV and Discovery fall under the tax net
  • Companies such as Mukta Arts which import cinematographic equipment would benefit as their costs of production would reduce.

    Industry wish-list
  • The import duty on broadcasting equipment should be reduced from the present level of 68.5% to any where between 5% to 15%

  • Removal of excise duties on audio and video CDs. (Currently they attract an excise duty of 16.5%.)

  • Import duty on digital cinema equipment should be reduced from the current level of 40% to 25%.


      Key Positives     Key Negatives
  • With the demand from television channels burgeoning, both television content providers as well as film producers such as Mukta Arts are commanding a good price for their content.

     
  • The dogfight among channels has led to burgeoning costs of production. The primary contenders viz. Star, Sony and Zee have all ramped up annual production budgets to nearly Rs 1.7bn to Rs 2 bn. This is bound to put further pressure on the bottomlines.

  • The changes in the regulatory framework, which have allowed broadcasters to uplink from India, will allow them to tap into local advertising. This could almost double the advertising market for broadcasters.

     
  • The working capital cycle for most content providers is far too stretched (almost four to six months) putting pressure on their cash flows.

  • Animation continues to remain an attractive business for Indian companies. The difference in the cost of executing animation jobs between US studios and their Indian counterparts is expected to drive turnover and profits of Indian animation majors, for the foreseeable future.

     
  • The revenue model for the cable and satellite companies is still skewed in favour of cable companies.

     
  • Advertising spends of FMCG majors could slow down in the coming year

  • How was this sector impacted by Budget 2001?