Indrani Sen: Effects of Union Budget 2017-18 on M&E Industry

06 Feb,2017

By Indrani Sen

 

The M&E Industry has welcomed the Union Budget 2017-18 presented by the Finance Minister Arun Jaitley on February1, 2017 in spite of any specific reference to the industry. Industry stalwarts seem to be of the opinion that the general tone of the budget boosting the infrastructure and lifting rural income will help in the growth of the M&E industry. While Arun Jaitley did not highlight any direct plan for the M&E industry, he announced other indirect plans that could help the industry in positive way.

 

The focus on digitisation announced by the FM allocating Rs10, 000 croresfor Bharat Net to boost the rural fibre optics network, seems to be the high point of this budget for the M&E industry.This plan, after implementation, promises to give digital access to over 150,000 gram panchayats. It will not only give a boost to the rural economy, but also result in acceleration of digital consumption of video content on various OTT platforms across India. This boost to the digital ecosystem is the beginning of the end of the urban-rural divide in terms of digital media reach in this vast country.

 

While Indian broadcast media has welcomed the above move, Indian print media has remained conspicuously silent. Print needs to make plans for becoming a part of the upcoming digital India by moving along with the laying of the fiber optics network and adopting the gram panchayats as they become digitally literate. A constructive movement by regional dailies to make digital news hyperlocal may help also in monetizing the e-editions from the grass root level. After all, print can micro-control their footprint on the ground which is not possible for the broadcast media.

 

The FM announced reforms in the financial sector such as the abolition of the Foreign Investment Promotion Board (FIPB) so as to facilitate a new policy for foreign direct investment (FDI). This move has been welcomed by the M&E industry, who are expecting further liberalisation in FDI policy during the course of the fiscal year. Bollywood has welcomed this move particularly as it expects the abolition of FIPB will induce more foreign studios to invest in India which will create more job opportunities and also will bring more international cinema to the Indian audiences.

 

The quick action teams proposed by the FM, to look into cybersecurity infractions has also been applauded by the M&E industry as an essential requirement for a smooth transition to a digitally enabled India. Bollywood has also welcomed this announcement hoping that such a watchdog would also help in countering film piracy which has been pestering the Indian film industry for decades.

 

While presenting the Budget, Jaitley has announced that GST will be implemented as per schedule. Except the print industry, the rest of the M&E industry seems to have no major quarrel with the implementation of GST. The broadcast industry, currently paying double taxes on TV channels, expects a lot of uniformity in taxation. Again, the film industry is looking forward to the GST regime which is expected to regularize the Entertainment Tax across the sates. As a result, it is forecasted that the rates of movie tickets will go down to about 15-20 per cent in the states where currently the Entertainment tax is high.

 

A few leaders of the M&E industry have expressed some disappointment about the 2017-18 Union Budget. ABP News Network COO Avinash Pandey was quoted by Indiantelevision.com“The Union Budget 2017 was disappointing as far as the expected incentive for the broadcast business is concerned. Service tax remains the same. Most importantly, there is no parity with the print sector. The ‘wow’ factor was missing (in the budget) as far as the business is concerned. Disposable income is going to increase, and hence the quantum of spending. Economy may revive after the implementation of the budget.” http://www.indiantelevision.com/specials/budget/budget-2017/media-and-entertainment-industry-hails-union-budget-2017-170202.

 

A Mohan, President – Legal and Regulatory Affairs, ZEEL, was quoted by MxMIndiatalking on the need of infrastructure status for the broadcasting sector. The sector deserves to be treated as Infrastructure industry, thereby qualifying for benefit u/s 72A(1) of the Income Tax Act, he said.. The same article also quoted Girish Srivastava, Secretary General, IBF: “The Foundation is extremely hopeful that the Government would consider the suggestion for granting ‘infrastructure status’ to the broadcasting industry, along with permission to carry forward of losses in case of amalgamation or merger as that would have made the M&E sector a more viable engine of speedy growth.” http://www.mxmindia.com/2017/02/reactions-to-budget-2017-18/.

 

The FM has promised that effects of demonetisation will not spill over to the next year. It is expected the economy will get remonetised with consumer spends bouncing back to normalcy helped by the personal tax reforms. It remains to be seen if the advertising industry forecasts for adspends in the current year echoes the same promises.  To sum up, it seems the recommendations of the Union Budget 2017-18 would help inreinstating the growth rate in the M&E industry.

 

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