Television digitisation is finally getting institutionalised in India. Though the hike in import duty in set-top boxes from four per cent to 10 per cent will put pressure on cable and DTH companies in the short-term, the long-term could see the emergence of a bunch of new entrepreneurs investing in set-top box business.
Today, hardly one per cent of the sourcing of set-top boxes is done from Indian companies. There are only two Indian manufacturers, MyBox and Beetel, and neither of them offer the high-end technology that DTH providers and digital cable companies need.
"With the government encouraging sourcing from the domestic market, it will give confidence for the existing ones (companies) to upgrade their technology and (encourage) new ones entering the fray," says Sugato Banerji, COO of TV guide channel, Whats On India.
The move of increasing import duties is a positive assurance of digitisation, points out Pankaj Krishna, CEO of media research company, Chrome Media. "I know a lot of entrepreneurs who are eyeing this business, but the indefinite delay of rolling out digitisation has made them insecure."
While only 10 million homes out of 105 million have been digitised in the first phase of digitisation, the second phase would have 16 million, and the third phase, 32 million. This will result in digital, cable and DTH operators wanting to source more boxes from local manufacturers.
Today, the average cost of a set-top-box is Rs 1,500. With a six per cent hike in import duty, the cable or DTH company would have to pay Rs 90 as import duty. Sourcing from a local manufacturer will give the cable and DTH companies a cost advantage as costs are likely to come down by 20-30 per cent.