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M&E sector to touch Rs 1000 billion by 2011-12: Assocham
May, 31st 2008

The Associated Chambers of Commerce and Industry of India (Assocham) has projected that media and entertainment sector is expected to cross a turnover of Rs 1000 billion by 2011-12 from present level of about Rs 440 billion.

The study, "India: The Entertainment & Media Hub," was brought out by the Assocham and jointly released by film celebrity Shah Rukh Khan, Assocham president Venugopal N Dhoot and its secretary general DS Rawat.

The turnover of the television industry, according to the study, will grow by 22 per cent to Rs 519 billion by 2011-12 from the current size of Rs 191 billion. Subscription revenue is projected to be the key growth driver for the television industry as pay TV homes will increase from 71 million to over 100 million in the next four years.

The Chamber has suggested that in order to make India a hub for entertainment and media, it is urgently required that this sector be brought into concurrent list from state list and also holds a view that the government should enact Optic Disc Law in a manner that can encourage exponential growth for film and entertainment industry.

Khan and Dhoot have jointly demanded that VAT and service tax be removed on entertainment sector.

The study has also pointed out that that it has become necessary to bring in entertainment industry under the concurrent list so that it can also be governed, monitored by central rules as also enjoy certain tax concessions as announced by the central government from time to time.

Currently, the entire entertainment and film industry falls under the jurisdiction of state governments. As a result, it has not been able to enjoy the already conferred dejure industry status on entertainment and film industry. Retaining the industry in the state list, certain matters concerning the central government cannot be taken up with the Union ministry, besides the tax concessions.

The Chamber has also pointed out that in the Finance Act of 2007, service tax has been made applicable in case of renting, leasing, letting immovable properties which include theaters, exhibition halls and multiple use building with the result that the central excise departments has issued notices for recovery of service tax from entertainment industry.

As the film industry is already burdened with various types of taxes and fee imposed by state governments and local self governments, the central government is persuaded to exempt the transactions between producers and distributors.

As regards to Value Added Tax (VAT), the Assocham has pointed out that for the film and entertainment industry, the VAT imposed is 12 per cent which is too high. The tax should be waived off as producers are put under heavy burdens. If waiving off of this VAT is not possible, its rate should be brought to 4 per cent.

The Chamber has also reiterated that infrastructure status should also be conferred on film and entertainment industry under Section 10 (G) 23 of Income-Tax Act 1961.

Dhoot said that amendment should be made in Cable TV Networks Regulation Act 1995 and state governments be authorized and empowered to grant licenses to the applicants.

The enactment of Optic Disc Law as suggested by the Assocham would meaningfully combat video, cable and TV piracy. Such a law has produced encouraging results in the neighbouring countries such as Malaysia and Hong Kong.

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