In spite of giving relief to local players by increasing 5% custom duty on imports of Set Top Boxes in India, domestic players are finding difficult to produce Set Top Boxes due to the policies loopholes enjoyed by the international players.
Set Top Boxes which are imported from foreign countries are purchased directly by MSOs which in turn are sold to the customers directly on a lease basis thus avoiding VAT in the Indian Set Top Box market. However local manufacturers are required to charge VAT on the production of Set Top Boxes in India making their product less competitive in terms of cost and thus impacting their production of Set Top Boxes in India.
According to 6Wresearch, the total shipments for Set Top Boxes in India amounted to 5.3mn units in CY Q1 2013. Skyworth leads the Indian Set Top Box market, followed by Cisco, Coship and others.
With government directing rules to completely digitize the entire pay TV market by 2014, the Indian Set Top Box market is expected to grow exponentially over the coming years. Evaluating the present market scenario, majority of the total cable TV subscribers are still on analog based networks; however we expect a shift towards digital cable TV platform. Also, with the introduction of High Definition (HD) channels and smart TVs, the market for digital TV viewing is expected to increase significantly.
Imports of Set Top Boxes in India constitutes the significant share of total Set Top Boxes, around 85% due to the cost advantage enjoyed by the foreign players in the Indian Set Top Box Market.
Table 1: India Set Top Box Market, Players Market Share (CY Q1 2013)
||Share in %
Source: 6Wresearch Quarterly India Set Top Box Market, Q1 2013
Key Highlights (Q1 2013)
- Compared to the previous quarters the Q1 2013 witnessed slow production as well as the volume uptake was quite low.
- Top three players constituted more than 40% of the market share in the India Set Top Box market.
- Skyworth leads the market with 23.3% market share.
- Domestic shipments accounted for 15% of the total shipments of Set Top Boxes in India
Pricing of Set Top Boxes in India are comparatively high but are expected to reduce by around 15%-20% over the coming quarters. India is regarded as price sensitive nation, in-order to increase the penetration of Set Top Box in the Indian pay TV market; the cost of these Set Top Box needs to come down. The government in India is taking several initiatives to promote domestic production and accelerate growth of the Indian Set Top Box market. Cost for manufacturing Set Top Boxes in India is high as compared to other countries specifically in China. High cost remains a key challenge for the Indian Set Top Box manufacturers.
Taking the demand into consideration, manufacturing of Set Top Box in India is still low and at a very nascent stage. The Government should offer fiscal incentives such as tax holidays and capital subsidies to encourage production of Set Top Boxes domestically. However, with the government initiatives to encourage manufacturing, the market for locally produced Set Top Box is expected to accelerate over the coming quarters.
The competitive landscape for the foreign Set Top Box manufacturers have undergone a major shift with the introduction India's policy on cable digitalisation, foreign players have strengthened their market share and generated around 95% of business in India. Whereas, the domestic players have fulfilled only 5% of the total demand for Set Top Boxes in India. The competition is further expected to accelerate over the coming years.
The Indian Set Top Box market is mainly dominated by international players. Huawei, Pace and Chang Hong are the top players. Several international players are also planning to set up their facilities in India so as to bring the cost of these Set Top Box further down. Leading companies in India such as Bharat Electronics, MCBS, Mybox and Indieon Technologies are now contributing significantly to push local manufacturing market and strengthen their competitive positioning.
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India Set Top Box Market CY Q1 2013