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India slaps 10% import duty on foreign-made STBs

India’s finance minister has unveiled plans to double import duties imposed on foreign-made set-top boxes to 10%, as part of efforts to encourage STB makers to set up manufacturing plants inside the country, at a time when operators race to complete the digital switchover.

Outlining the proposals in his budget speech earlier today (February 28th), Minister P Chidambaram also revealed plans to allow companies investing INR 100 crore (INR 1,000mn or US$ 18mn) or more in plant and machinery before March 2015 to deduct an investment allowance of 15%.

However, various cable operators have already expressed scepticism that domestic STB production can be ramped up sufficiently over the next three years to meet the government’s target of full digitisation of the cable industry by 2014.

“In my opinion, the time that we have to digitalise the whole country is around two years,” said Suresh Sethia, director of Kolkata-based MSO Siticable, speaking to India’s Economic Times. “In this period, any increase in customs duty will not benefit the industry.

“To promote production of STBs in India, the government should have given subsidies to encourage domestic production, instead of raising import duty. With this duty, the average cost of each STB will go up by INR 70-80.”

With around 150mn cable TV subscribers, India is the world’s third-largest market for set-top boxes after the US and China, and analysts estimate there is a potential for 100mn more set-top boxes to be sold over the next two to three years due to the digital switchover.

Ravi Mansukhani, Managing Director of leading Indian cable operator InCablenet, told IP&TV News earlier this week that he expects the first phase of the digital switchover in Mumbai, Delhi and Kolkata to be completed by the end of March this year, with the second phase most likely to be postponed until July.

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