Entertainment industry unhappy with national budget

By IANS

New Delhi : Although Finance Minister P. Chidambaram said that India will through its arts and culture be projected as “soft power” and allocated Rs.750 million ($18 million) for the purpose, the media and entertainment industry was not so happy with the budget.


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“The budget has nothing much to offer to the media and entertainment industry,” said Apurva Purohit, chief executive officer of Radio City, which runs a radio network in the country.

She expressed unhappiness over the service tax being extended to development and supply of content for use in advertising purposes.

Excise duty exemption on recorded videocassettes intended for television broadcasting has been withdrawn and eight percent excise duty has been imposed, she pointed out.

Commenting on its impact on the sector, she said the burden of rise in advertising cost would be passed on to the consumer. Rise in advertising cost will bring a slowdown in the advertisement revenues to broadcasters and print media, she said.

However, it will also depend on the performance and growth potential of industries such as fast moving consumer goods, pharmaceuticals, telecom and software spend hugely on ads, she said.

“Subscription revenues will become a key to the success of broadcasters and print media.”

“Excise duty of 8 percent on video cassettes will lead to rise in cost for the broadcasting industry whereas Telecom Regulatory Authority of India has capped the pricing for broadcasters. This is negative for the broadcasting industry,” she said.

She also pointed out that dominant players in the broadcasting industry will not be badly hurt as the compulsory rollout of CAS (channel associated signalling) will ensure elimination of under-declaration by cable operators leading to approximate 70 percent increase in subscription revenues.

Dhilin Mehta, CEO of Shree Ashtavinayak Cine Vision Ltd, the banner that churned out hit “Jab We Met”, expressed similar views.

“The budget has no big surprises. But exemptions to a certain limit to the individuals was reasonable. Corporate tax cut was expected which had no change in the new budget, which could have improved the situation of the corporates,” Mehta said.

“There were no extraordinary announcements for future growth especially for the film production and distribution houses which the industry needed for its growth.”

“There could have been some incentives for entertainment industry in form of reduction in indirect taxes.”

According to Tips Music’s Kumar Torani, they would be looking at the government to improve access of Indian entertainment industry to foreign markets, which should automatically bring down piracy.

Some individual producers were also with the budget.

“We expected some relief on the tax burden, but the budget has no provision for the same,” said T.P. Aggarwal, president of the Indian Motion Picture Producers’ Association.

Although some Bollywood producers were expecting some relief on service tax, excise and customs duty, the budget has done nothing in that regard.

Bollywood corporate houses, in contrast to the individual producers, were not as forthright in expressing their views.

“We have to study the budgetary proposals first. But, it seems to be a good budget in the sense no additional tax burden has been imposed on the entertainment industry,” said Manmohan Shetty, former chief executive of Reliance Adlabs.

Shringar Films’ chief Shyam Shroff, on the other hand, dismissed the budget as one prepared in keeping “the next general election” in view.

“I personally had never expected that the entertainment industry would find a special mention in the budget. So, we at Shringar are neither happy nor disappointed,” Shroff said.

The broadcasting industry had expected that the government would bring it under the purview of the 72A of the Income Tax Act 1961 on the lines of other big industrial houses to generate more revenues and employment.

It had also demanded earlier that the level of foreign direct investment in the media should be increased from the present 26 percent to 74 percent and that special economic zones (SEZs) should be created for media to give boost to the export of Indian media content.

But there is no reference to the same in the budget.

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