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Below the Prebudget Expectations for media and entertainment (M&E) sector and Online Gaming by Prashant Bhojwani, Partner, Corporate Tax, Tax & Regulatory Services, BDO India

Media and Entertainment (M&E) sector:

With the Union Budget round the corner, all eyes are on whether the proposals will foster an ecosystem for the Indian media and entertainment (M&E) sector to continue its rapid expansion.

• Foreign direct investment (FDI) in print: Currently, Foreign Direct Investment (FDI) in print (news and current affairs) is capped at 26%. Globally, the print sector faces challenges due to digitalisation. Considering the trend of liberalising FDI caps and the sector’s need for investments in digital assets, it is advisable for the Government to consider increasing the FDI cap for print to 49% under the automatic route, similar to the radio sector. This would help in attracting foreign investments into this traditional sector, supporting its modernisation and growth.
• Tax holiday:  Despite being the largest producer of films globally, with approximately 1,700 films annually, India’s screen density is only 6-8 screens per million population compared to China’s 30. Screens have a ripple effect on the economy providing opportunities for other economic activities such as housekeeping and food and beverage services, besides serving as a platform for film monetisation. Given this backdrop, the Government should consider introducing a tax holiday for new theatres [similar to section 80-IB(7A) of the Income-tax Act, 1961] to encourage investments in the exhibition business as well as streamline the approval process for opening new screens.
• Infrastructure status: Broadcasting is inherently a capital-intensive business and requires substantial investments in digitisation, technology upgrade, infrastructure architecture and continuous content development. Despite these requirements, the broadcasting sector currently lacks infrastructure status. Granting this status would be beneficial as it could help in securing financing for future growth initiatives, among other advantages

 Online Gaming:

Online gaming is one of the fastest-growing sectors globally and unsurprisingly, it has witnessed a massive upsurge in India, contributing to revenue generation and creation of employment opportunities. This transformation has led to the Government enacting specific provisions under Income-tax and Goods & Services Tax for online gaming. In this context, the Government should consider formulating a comprehensive policy to (a) introduce international best practices for the sector, (b) create distinction between real-money games and other online games, while simultaneously fostering technological innovation. 

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