Financial Daily from THE HINDU group of publications
Friday, May 30, 2003
Industry & Economy - Excise and Customs
Duty on set-top boxes cut to 5 pc
NEW DELHI, May 29
PROVIDING signals that the conditional access system (CAS) may be on course despite the growing concern among powerful political circles and within the industry, the Government on Thursday slashed the basic customs duty on set-top boxes (STBs) to 5 per cent from 25 per cent while doing away with the countervailing duty and special additional custom duty. However, these concessions will be available up to July 31 only.
The duty changes would result in the prices of set-top boxes across the various range coming down by around 45 per cent, thereby making them much more affordable to a wider section of the population. According to industry estimates, the price of a STB that would have earlier cost Rs 4,000 would now be available at around Rs 2,700.
Speaking to newspersons, the Information and Broadcasting (I&B) Minister, Mr Ravi Shankar Prasad, said the duty component for STBs has been reduced drastically keeping in mind consumer interest. ``Prices could fall by 45 per cent,'' he said. Earlier the STBs used to attract 25 per cent basic customs duty, 16 per cent countervailing duty and four per cent Special Additional Duty, besides sales tax ranging between 4 and 12 per cent.
Finance Ministry officials maintained that the actual revenue implication of this move is not ascertainable as the revenue collection is the function of the number of sets that are imported.
The decision to reduce import duty on STB was made after the Prime Minister, Mr Atal Bihari Vajpayee, directed the I&B Minister to make CAS consumer-friendly at a meeting last week.
While the Government claimed that the concessions have been given for a short time to ensure smooth rollout of CAS in the metros and give the domestic industry a chance, the Consumer Electronics and TV Manufacturers Association (CETMA) expressed unhappiness and said, ``this would harm the indigenous industry and investment made by some of the manufacturers will go waste.''
According to a CETMA official, ``the consumer electronics industry, to cater to the huge demand of the consumers, had invested substantial amount in plant and machinery as well as in the import of inputs. Some of the indigenous manufacturers had received orders for manufacture of STBs and had geared up their production, to meet the demand.''
Reacting to the reduction, the spokesperson for the Hinduja TMT owned InCablenet said the decision was a good one. ``The company will rework its marketing strategies as the price of STBs would come down,'' he added. The company has already placed orders for about three lakh STBs from German company Technotrend and a Taiwanese company Wistron. It has already branded its CAS service as INDigital.
Today's decision is significant, as the entire CAS controversy has assumed political overtones. Members from both the ruling BJP and Opposition Congress and Left have expressed concerns about its implementation. Mr Prasad has asked the Delhi Chief Minister, Ms Sheila Dikshit, to take steps to remove the sales tax of STBs since she had said that there is need for a ``more easily payable scheme'' for consumers.
He also allayed fears that the cable operator would make an arbitrary selection of free-to-air channels in the basic tier and said that the Government could bring about legislative changes to ensure that consumer interest is protected.
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