DTH operators seek PLI schemes to promote local manufacturing of STBs

Direct to Home (DTH) television service providers such as Tata Play and Bharti Telemedia want a production-linked incentive (PLI) scheme to promote local manufacturing in the Indian broadcasting sector.

“While the government has brought in various PLI schemes to encourage domestic manufacturing in telecom, and with the recent focus on semiconductors, we believe that the equipment of the DTH industry shall also be covered under this scheme,” said Bharti Telemedia.

DTH operators acknowledge that the broadcasting sector has an over dependence on imports, especially from China and South-East Asia, which thus warrants immediate localisation of manufacturing.

As operators commence localisation of set top boxes, which are the most integral component of their delivery network, they are seeing higher cost and poorer quality of end product. “It is a known fact that the cost of manufacturing of set-top boxes in India is much higher as compared to South East Asia. It would take us a while before we can build the chassis and the printed circuit board in India, thus reducing the import on chip alone,” said a Tata Play official.

Chip shortage
Bharti Infratel also points out that the ongoing chip shortage is a major hurdle for local entities manufacturing set-top boxes. Operators argue that local capacities, currently, cannot meet the overall demand of set-top boxes in the country. For instance, Tata Play will only manufacture 50 per cent of their set top boxes in India by the end of FY22, and thus, it wants the regulator to add the same to the telecom PLI.

Bharti Infratel agrees, saying “considering nearly 12 crore domestic DTH and cable TV subscribers, inclusion of the STB under the telecom PLI scheme should be a natural extension to help industry propel the domestic component manufacturing and self-reliance. This will also boost employment in the country.”

The company also said alternatively, the government should also consider notifying a new PLI scheme for the broadcasting sector to cover all the equipment as there is a huge potential keeping in view the current imports of around $20 billion.

Tax arbitrage
Another hurdle, as pointed out by Dish TV, is high tax arbitrage (greater than 40 per cent) through high cess, import duties and buyers stamp duties on higher end set top box equipment is shifting demand from unauthorised channels, i.e. the grey market. Currently, Dish said 55 to 60 per cent of sales happen on the grey market resulting in significant drop in government revenues and infiltration of poor quality products.

Moreover, the company argues that the imported set-top boxes are of a higher quality in comparison to the locally produced ones, with the cost of support services being better for the imported counterparts. Which is why, in order to bolster local manufacturing, Dish believes the government needs to promote research and development.

The company also said at the moment, no Indian manufacturer has developed the capabilities needed to manufacture a set top box. The Hindu BusinessLine