The Indian entertainment industry is one of the fastest growing. Changing lifestyles and increasing disposable income levels have led to increased penetration levels of the media, although there is still ample scope for growth. Access to global entertainment avenues, outsourcing of animation business to India and increasing migration of Indian population will help this industry to grow at a faster pace. Further, companies have diversified to provide a complete package across various segments of the entertainment value chain. The future of the entertainment industry will be decided on the interplay of a number of reasons like consumerism, advertising spend, content, pricing, technology and regulation. It is estimated that this industry is set to grow at a CAGR of 18% to reach an estimated size of Rs 1.1 trillion in 2011.
Budget Measures
Custom duty to be charged only on the value of the carrier medium in the case of imports of films, music and games
Service tax to be levied on the transfer of intellectual property rights incase of imports of films, music and games
Imports for setting up of Digital Head End equipment by multi-service operators will attract a concessional customs duty of 5% and full exemption from special additional duty
Exemption from service tax given to news agencies which provide news feed online subject to certain criteria
Surcharge on domestic companies reduced to 7.5% from 10%
Increase in the rate of Minimum Alternate Tax from 15% to 18% of book profits
Budget Impact
Increase in tax slabs for citizens would result in higher disposable income that will likely trigger increased demand for media and entertainment.
The media industry did not receive much attention in the budget in the form of structural reform such as FDI limits, although it will indirectly benefit from the social sector schemes.se products.
Company Impact
The rationalization of customs duty structure on carrier medium will help production and post production houses such as Reliance Media Works, Prime Focus and Compact Disc.
The concessional customs duty on Digital Head End equipment will incentivise MSOs such as Hathway Cable and Wire & Wireless.
Increased demand for media will mean a positive development for players from the print sector such as HT Media and Jagran Prakashan. In the electronic media space, it will be positive for content providers like UTV Software and exhibitors like PVR, INOX Leisure, Cinemax.
The Indian entertainment industry is one of the fastest growing. Changing lifestyles and increasing disposable income levels have led to increased penetration levels of the media, although there is still ample scope for growth. Access to global entertainment avenues, outsourcing of animation business to India and increasing migration of Indian population will help this industry to grow at a faster pace. Further, companies have diversified to provide a complete package across various segments of the entertainment value chain. The future of the entertainment industry will be decided on the interplay of a number of reasons like consumerism, advertising spend, content, pricing, technology and regulation. It is estimated that this industry is set to grow at a CAGR of 18% to reach an estimated size of Rs 1.1 trillion in 2011.