India's national budget for 2011-2012 has proved disappointing to the nation's television industry, which had hoped in vain for tax incentives to help stimulate the drive to broadcast digitisation. It had been hotly anticipated that the government would remove the import duty on set top boxes and rationalise taxes in the media sector. However, no tax relief was given to the broadcast sector in the budget, announced on Tuesday 28 February. Cable and direct to home (DTH) TV operations remain classed by central government as service industries and by state governments as entertainment industries - and continue to face dual taxation as a result.

"The Information and Broadcasting Ministry should have convinced the Finance Ministry to drop the duty the government imposes on set top boxes," Ravi Mansukhani, MD & CEO, IndusInd Media & Communications told Indiantelevision.com. "It would have given a feeler to the world that the government is serious about digitisation. We were expecting a deduction in the custom duty and rationalisation of the tax structure. However, there is nothing."

A disappointed Salil Kapoor, COO of DTH operator Dish TV, told Exchange 4 Media.com: "As an industry, we have been expecting a lot from the Union Budget 2011, but no relief was given to us. Neither duties on set top boxes nor entertainment tax was reduced. There was [also] not any relief on the part of license fees from the Finance Minister."

The sector is considered highly taxed: broadcast license fees remain at about 10%, while entertainment tax can be as high as 25%, depending on the state. Furthermore, with 90-95% of set top boxes reportedly imported for use in India, the import duties facing TV platform operators are significant.

A report from Media Partners Asia in autumn 2010 was critical of India's government for failing to offer beneficial tax structures for its broadcast sector - which faces falling profit margins despite registering the largest growth in the world.