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FICCI's report on the entertainment
industry projects optimistic figures
The Federation of Indian Chambers
of Commerce and Industry (FICCI) has compiled a report "The
Indian Entertainment Industry: Strategy & Vision" with the
assistence of Arthur Anderson. It was officially released
at the "International Conference on the Business of Entertainment:
India-Opportunities in the 21st Century" held in Mumbai
on 30 March, 2000.
The report presents very optimistic figures pertaining to
the entertainment industry and makes some recommendations
to the government to facilitate the growth of the industry.
It expects the turnover of the entertainment industry to
touch Rs 600 billion. The report says that the future of
television broadcasting belongs to the satellite channels.
The market of regional channels is huge with more and more
players like Zee and Broadcast Worldwide making a foray
into the regional channel market. Even the niche channels
like Nickelodeon, Maharishi, Cartoon network, Fashion TV,
ESPN, Discovery, Channel V etc have a tremendous potential
and their huge success indicates the fragmentation of audience.
Regarding the Direct-To-Home (DTH) mode of distribution
of television channels, the report says that it too has
a tremendous potential and if the segment is opened up,
there would be 1 million DTH homes in India by 2002.
FICCI recommends that the government should lift the ban
on the use of KU Band reception equipments as it will be
incongruent in a scenario of freely viewable television
channels over the Internet. It also suggests that the government
should privatise the terrestrial network along with introduction
of DTH which will enable the smaller cities to receive satellite
channels as the cable operators ignore that segment. Another
important point highlighted is the ammendment in the conditions
for the presumptive rate of taxation of foreign companies
which stands at the rate of 10% of deemed profits. A legislation
clarifying the taxation of foreign telecasting companies
is demanded.
Development of about two to three earth stations in India
within the next six to seven years would generate revenues
between $12 million to $23 million as Indian as well as
foreign channels would consider uplinking from India. The
Government can generate revenues between $12 million to
$23 million by leasing a part of its terrestrial network.
The level of employment can double from the existing 2,50,000
people in the next three to five years. The growth in the
broadcasting industry will simulate a similar trend in industries
such as the television software industry, film industry,
the music industry and even the equipment and hardware manufacturing
industry which directly depend on the broadcasting sector.
In the cable television sector, FICCI has requested the
government to rectify the hinderences in the growth of the
cable television market due to restrictions on foreign equity
participation and the short-sightedness of the Cable Television
(Networks) Act, 1995 and the archaic Indian Telegraphs Act,
1885. The growth of the cable television industry would
help the government in generating more revenues in the form
of taxes. The penetration of Internet to the common man
can also increase with the growth of the cable television
industry. Employment in this sector stands at 2,50,000 people.
Additional 4,00,000 peaple can be employed in the next three
to five years.
On the television software side, FICCI has requested the
government to nominate a representative who would be an
active member and assist in industry issues like hardware
insurance, copyright protection, etc. The government should
also facilitate the growth of training institutions focussing
on software development that would help the students learn
modern techniques on up-to-date equipment and be aware of
the dynamic trends in the entertainment industry. The television
software and entertainment companies should also benefit
similarly from the 10% listing criterion currently enjoyed
by infotech companies as it would help in giving adequate
ESOPs. Another benefit of utilising 100% proceedings of
funds raised through ADR/GDR issues to acquire overseas
companies is enjoyed only by IT industries and this benefit
should also be made available to other companies.
Owing to the increase in revenues in this segment to $2,093
million by 2005, the government's tax collections will rise
to $318 million. If proper and adequate incentives are provided
by the government, the export earnings from this segment
will rise to $233 million within the next two years, from
the current $81 million. The industry expects this figure
to touch $1.356 billion by the year 2005. Direct and indirect
employment will rise from the current level of 1 million
to 2 million by the year 2005.
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