Published : January 31, 2019 05:10 AM
The Finance Ministry of India is expected to table its interim budget on February 1, 2019. What impact will the budget have on the media and entertainment industry? There's no simple, singular answer to that. Television, print and radio experts each have different hopes and expectations from the budget, as each industry struggled with different challenges over the past 12 months.
For print it has to do with newsprint prices and ad spends, for television it's about new tariff orders, and for radio it all comes back to import duties and tax. GST, of course, affects everyone.
Edited excerpts of what experts across media verticals said in this regard:
Partho Dasgupta, CEO, BARC India
The broadcasting sector is in the midst of a changing ecosystem given the backdrop of the New Tariff Order. The upcoming Union Budget will be crucial in terms of upgradation and streamlining of tax laws. We also expect significant government investment to create jobs in the M&E sector, which is an aspirational sector for today's youth. A friendlier FDI regime too would, no doubt, encourage more investments and boost long-term growth for the industry.
Government schemes have helped boost 'Make in India' and we are hoping more efforts will be taken in this direction. From a television measurement perspective, lower TDS for Section 8 companies like BARC India as well as exemption from 18 per cent GST, would be welcome.
Pradeep Dwivedi, group advisor, Sakal Media Group
The print industry in India has had a challenging year largely on account of steep increase in newsprint prices over the last 3-4 quarters as well as the tepid rate of growth in ad-spends and volumes. Hence, the industry is grappling with challenges on multiple fronts including talent and market opportunity and is investing in newer means of sustaining its survival via digital and experiential engagements. The industry also has challenges on rates and yields which have not improved significantly in the last few years. It is also battling a shift of ad-spends increasingly towards digital while continuing to compete with television on some fronts. Hence, the industry needs a positive and supportive regulatory environment that allows it to prosper on its merits with increasing access and penetration into tier 2-3 and 4 markets. Thus, any support that extends to procurement, production, circulation as well as content generation from markets beyond the open markets being supported by the government would be great.
The GST applicable on newsprint as well as newspaper advertising should be brought down to zero which is also great with the reduction of GST charged on events and engagements done by print companies which generate employment and productivity. The government should also seriously consider an ordinance to overcome the shackles presented via Majithia wage board implications which are limited to the print industry and are not impacting any other part of the media and entertainment universe to make it uniform and provide the industry with a level playing field.
M V Shreyams Kumar, joint managing director, Mathrubhumi
The media industry in Kerala witnessed a major setback in revenue this year due to the unprecedented floods that devastated the state's economy. It happened during Onam, which is the biggest festival season and hence, advertising was impacted across all media verticals.
Few of the issues we expect to be taken into consideration in the 2019 Union budget are:
1) Introduction of a 5 per cent GST on print advertising has affected the already ailing print business. The print budgets, instead of proportionally increasing, was restricted to include the added GST component.
2) The case is almost similar with 18 per cent GST for TV, Radio and Online advertising
3) The reduction of Corporate Tax to 25 per cent has been a long-standing requirement.
4) Abolishment of 5 per cent GST on the import of Newsprint.
5) Extension of Tax reduction on low-speed machinery used for newsrooms and allied production activities.
Nisha Narayanan, COO, RED FM
For the radio industry, FDI policies, tax and duties rationalisation are some areas that need focus during the union budget. Radio has entered into additional tier 2-3 markets as part of phase 3 expansions and for the industry to look at additional cities for launching newer stations, the setup capex cost is something which needs to be lowered. This is only possible if the budget rationalises the import duties on radio equipment which is currently around 30 per cent. A reduction in this will surely make it more viable for both the smaller and larger players to look at setting up newer stations. We expect the budget to look into rationalising import duties on transmission and other related equipment in this union budget. This, in fact, will also bring in new local players who might want to participate in Batch 3 of Phase 3 auctions and grow the medium in many untapped cities. Currently, the FDI stands at 49 per cent for the radio industry. Liberalisation of the same will also majorly help in private FM stations to reach the current media-dark cities in India.
Also, currently, the GST for radio advertising is at 18 per cent, we would expect the GST to also be brought down to the 5 per cent slab, making the medium more price-competitive. This will encourage advertising growth and garner more business in the upcoming financial year. Since radio has last mile reach, lowering of GST will enable small businesses to advertise and expand their businesses.
Ashit Kukian, CEO, Radio City
The radio industry, like all other sectors, is eyeing its share of positive news from the Government, with the unfolding of India's Union Budget 2019. If the regulation of allowing private FM channels to broadcast syndicated news bulletins is anything to go by, then we can look forward to many more positive outcomes from this year's budget.
Poised to emphatically favour the common man, the Union Budget is expected to boost disposable incomes of families and consumers, both in urban and rural areas. With increased consumer spending, the radio industry is looking forward to a surge in advertising spends from key verticals such as automotive, consumer durables, e-commerce, and real estate to name a few. Additionally, the anticipated moderation of GST rates for these industries can further boost their marketing and advertising spends, which in turn, signals a positive advertising revenue outlook for the radio industry.
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