Boost rural consumption, tax concessions: Media industry's expectations from Union Budget 2023

Union Budget 2023, which will be presented by Finance Minister Nirmala Sitharaman on February 1, 2023, is of particular interest to various sectors and industries - including the media industry. Notably, it is also going to be the last budget being presented before the General elections 2024.

Media veterans who have been keeping an eye on the industry told BestMediaInfo.com about their key Budget 2023 expectations - like stimulating consumption in rural areas, concessions in taxes, withdrawal of custom duty on import of newsprint, re-examining GST for radio sector, and more. 

Budget’s role in stimulating consumption in rural areas

Shashi Sinha

Shashi Sinha, CEO, IPG Mediabrands, said, "Actually, we wish the Budget helps in stimulating consumption - particularly in rural areas where the demand is a bit stifled. Any step which improves sentiment for consumption will help our clients which will have a cascading effect on us as increase in demand means clients will spend to grab a share of that rising demand."

Custom duty on import of newsprint should be withdrawn

Sivakumar Sundaram

According to Sivakumar Sundaram, Chairman of the Executive Committee of Bennett, Coleman and Company (BCCL), and a member of the BCCL Board as Executive Director, it is very important that the fiscal policies support the print sector. Newspapers are the fourth pillar of democracy and have not yet recovered from the COVID-19 induced business slowdown. 

“It is necessary to ensure that duties and taxes which impact the newspaper production are rationalised to support the sector which is playing a critical role, especially on the menace of fake news. A strong credible and independent media is a necessity for a thriving democracy,” Sundaram stated. 

Furthermore, he went on to state that the newsprint industry has input GST (Newsprint at 5% GST) but Output, which is in the form of advertisement, is taxed at 18% GST. This results in an inverted duty structure for the print industry. The print industry, like the concession provided to the manufacturing industry, should be given the benefit of claiming excess input tax credit as refund.

“GST was levied as a central tax and subsumed within it many indirect taxes. However, it is being implemented as a state specific levy. A higher input tax credit in one state is not allowed to be adjusted against other states' output liability. The government should consider making input tax credit as fungible i.e. allowing ITC of one state to be used against output tax of any state. This will release the blocked working capital of industry and enable the industry to use this capital for investment and improving output,” Sundaram said.

He also highlighted that the custom duty at 5% on import of newsprint should be withdrawn as it is over and above the IGST and adds to the total cost of production being non-creditable against any output tax liability. The customs duty on newsprint does not offer any support to domestic industry and is only a burden on the publishers.

“The existing Free Trade Agreement (FTA) should be continued unaltered. FTA with different trading partner nations such as Malaysia, Indonesia and others provides a duty benefit and we should consider adding more countries especially from western hemisphere,” Sundaram said. 

“The concessional duty given on printing presses and related machinery with a purpose to boost newspaper industry should be continued and SWS/GST should be abolished as most of the equipment i.e., printing presses, CTP equipment and mailroom equipment are not manufactured in India,” he added.

Sundaram also pointed out that consumables - namely inks, plates and blankets - are a necessity for the printing of a newspaper which constitute a large cost element and therefore a reduction of taxes on all of them would be more than welcome.

Speaking about the expectations of the Print industry, an official spokesperson of Dainik Bhaskar Newspaper Group said that there should be a rollback of custom duty imposed on newsprint imports.

“Like newsprint, we propose a GST rate of lower bracket at 5% in place of the current 18% GST for sale of ink and plates to RNI registered publishers,” the spokesperson added.

The spokesperson added, “The reduction of import duty on wastage pulp will be beneficial to newsprint mills.” 

Abhishek Karnani

According to Abhishek Karnani, Director, Free Press Journal, the imposition of custom duty on newsprint reels has increased the landed cost of principal raw material of the newspaper industry.

“A reduction or removal of custom duty will be helpful for survival of industry,” Karnani added.

Invest in boosting radio infrastructure, create policies that will help the industry expand into new markets

Nisha Narayanan

Nisha Narayanan, Director and COO, Red FM and Magic FM, said that the radio industry is in need of a fair and equal opportunity with regards to advertising support from the government. 

“Despite radio stations providing a last mile reach for audiences, government spending on the medium has not grown in recent years and advertising rates have remained unchanged for a decade,” Narayanan added.

“To address these challenges, we call on the government to invest in boosting radio infrastructure and create policies that will help the industry expand into new markets. The radio industry needs a level-playing field to compete with the digital ecosystem, and this can be achieved by allowing news and current affairs on the radio. This will encourage more players to enter the industry and make it less monopolistic in nature,” she added.

Furthermore, she went on to state that as a 69-station network, the sector would also like to see the government allowing radio players to network, resolving music royalty issues, and creating a friendly IT policy for streaming content digitally. 

“OTT players have a significant advantage, being able to broadcast to a wider audience without investing in licensing or OTEF and at lower infrastructural costs. We, on the other hand, invest in all these areas and in creating original content,” Narayanan stated. 

She concluded by saying that with the right policies and support, radio has the potential to continue being a vital medium for reaching mass audiences and providing valuable content.

Ashit Kukian

As per Ashit Kukian, CEO, Radio City, the radio sector has been experiencing a steady recovery post-Covid. With the budget for 2023 to be announced soon and the radio sector has tall expectation from the same.

“One of the most important expectations for the Union Budget 2023 is to re-examine and rationalise GST for the radio sector. This rationalisation can aid the radio industry to build higher revenue and focus on a stronger growth trajectory. Additionally, we hope that the government draws attention to the integration of technology and digitisation across hinterlands as it will help strengthen the radio and media industry in bolstering the audience base,” Kukian stated.

He then added, “Leveraging this reach, the radio industry can continue to be one of the most preferred media of communication and offer relevant information across the length and breadth of the nation. While the recently announced new radio phase III guidelines will boost the radio industry, we believe that the government should also provide an extension on the licence period and streamline the annual licence fees.”

Media sector should be given tax concessions

Abhay Ojha

As per Abhay Ojha, CBO, Zee Media Corporation, the media sector – which is the fourth pillar of democracy - should be given concessions in taxes, along with an increase in FDI. Presently digital news has a limit of 26%, TV is allowed 49%, which is considerably low as compared to say the defense sector – where the cap goes all the way up to 100%.

Highlighting other expectations, Ojha added, "Private FM radio should be given news broadcasting license for overall growth of media. Increase in internet usage has given life to web journalism and for its development, the web world needs public advertisements just like TV and print media."

"Public advertisements need to be regulated for healthy journalism. There is a need for regulation in advertising distribution as far as TRPs and other mediums are concerned. There is a need for financial aid or insurance for field correspondents covering life threatening events and emergencies. There is a need for exemptions in newsreels in print media for its survival," he stated.

Propose tax subsidies on export of products and services related to metaverse and gaming

Chandrashekhar Mantha

Chandrashekhar Mantha, Partner, Deloitte India, highlighted some of the key expectations from Union Budget 2023 including, concessions on infrastructure expansion to boost the exhibition sector in Tier 2 and Tier 3 towns and to improve screen density across India.

Furthermore, he went on to state, "Concessions on further development of the AVGC sector for skill development as well as schemes to attract FDI investment in the AVGC sector. The government subsidy schemes and other benefits like access to funds, for development of start-ups/MSMEs in the media and entertainment sector for emerging technologies. Propose tax subsidies on export of products and services related to metaverse and gaming that are fully manufactured/designed in India. Lower taxes on skill-based gaming models."

"Specialised treatment to transactions in metaverse and NFT with lower tax rates to encourage and support the adoption of technology and meta ecosystem. Budgetary support and public private partnerships (PPPs) to develop infrastructure in sports category. Multipurpose stadium infrastructure in states with international tie up with sports associations to promote other sports popular globally but nascent or underdeveloped in India," he added.

Focus on innovations that will boost start-ups across sectors

Bhavesh Talreja

According to Bhavesh Talreja, Founder and CEO, Globale Media, most of the brands are expecting consistently controlled inflation and less volatility so they can offer their specific products at stable prices. Especially tech industries - such as mobile gaming, esports, and SAAS companies - are expecting a lower tax slab from the government so that they can experience exponential and sustained growth.

“Moreover, with 5G services picking up across the country, brands are hoping that the Union Budget focuses on tech R&D, solutions and innovations that will boost start-ups across all sectors,” Talreja added.

Encourage Indian developers to promote AI sector

Pranav Jha

According to Pranav Jha, Director, Ap Web World, the marketing sector is expected to grow this year as compared to last year. 

"We expect the Union Budget to focus more on digitalisation and promoting a green economy, we are expecting faster and steadier growth in the marketing and advertising sector. Our country is moving ahead technologically, it will be interesting to see what else we get in this year's budget, as this will be the last budget before the (general) elections. Since the buzz of AI and its tools like ChatGPT has grown tremendously, we expect the government to encourage Indian developers to promote this segment," Jha added.

"This is the future and need of the hour. As our Union Finance Minister is about to announce Union Budget 2023-24, irrespective of its impact on the economy, we can expect that Budget 2023 will be excellent for advertising and marketing in India," he stated.

Speed up infra development projects

Rohan Mehta

In the views of Rohan Mehta, CEO, Kinnect, the government should reduce the tax burden on the lower-income group – this would result in more disposable income, which is required in the current inflation period. 

“They should speed up the infra development projects – for India to achieve a $5 trillion economy and to counter China in terms of attracting manufacturing, infra is critical. We should also have ease of doing business. Along with infra, we need to work more towards ease of business to help start-up ecosystems and bring foreign investments into India. Also, India has quickly adopted a digital payment system during the pandemic, and the government needs to continue with its effort on digitisation,” Mehta added.

Earlier, GroupM India in its 'This Year Next Year' Report 2022 stated that the growth in the number of start-ups and unicorns will translate to the growth of digital. Many small businesses are also choosing to spend on digital as other traditional mediums are expensive.

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