The growth story of digital TV viewing in India had just begun with DTH players like Dish TV, Tata Sky, Big TV, Sun TV and Airtel Digital crowding the market. TV viewers were spoilt for choice, forcing DTH players to reduce prices of their offerings leading to a price war.

With the Finance Minister introducing 5 per cent customs duty on set-top-boxes, DTH players have gone out of gear since the 15 per cent customs duty was abolished in 2006.

So what does this mean to consumers?

From 1 million in 2005, the DTH subscriber base has grown to 10 million in 2008. The industry predicts the DTH subscription to reach 28 million by 2013.

But with the finance minister introducing a 5 per cent customs duty on set-top-boxes, experts say the growth projections may take a hit.

Vikram Kaushik, MD and CEO of Tata Sky, said, “DTH is a heavy taxed industry. We pay 10 per cent license fee, which is the highest, in addition to service tax, state VAT, excise duty on STBs and entertainment tax. Cumulatively the tax impact is 45-50 per cent, which means for every Rs 300 you as a user pay, we pay 45-50 per cent."

Almost all the leading DTH players import set-top-boxes…and with the customs duty… what does it finally mean for the end consumer?

According to Leading DTH player, Dish TV, said, "With 5 per cent customs duty levied, prices of STBs will go up and this will have to be passed on to the customers."

As of now, users pay anything between Rs 1,500 to Rs 4,000 for a set-top-box depending on the DTH provider. This is expected to increase by Rs 100 to Rs 500. On the other hand, Videocon who has announced plans to enter the DTH space is all smiles, as it intends to manufacture set-top-boxes locally. So, will others follow suite to cut cost?