Ahead of the Finance Minister Nirmala Sitharaman’s fifth Budget speech on February 1, e4m spoke to experts of the Indian advertising and media industry to understand their expectations from the interim budget, also referred to as Vote of Account.
The interim budget, tabled ahead of elections, doesn’t usually propose any major policy changes. Yet,industry stakeholdershope that the government would take some measures ahead of polls that lead to more disposable income in consumers' hands and boost the economy which will in turn uplift theM&A sector.
They also seek higher government ad rates, tax waivers on newsprint and printing machines, and hope for a thrust on digital infrastructure among others, if not in the interim budget then in the full budget that would be tabled when the new government is installed in May.
Excerpts:
Sam Balsara, Chairman, Madison World
The year 2024 being an election year, the government has already indicated that the Union Budget will not have any major proposals. So, it is highly unlikely that the budget will have anything significant for the M & E sector.
However, outside of the budget, the government has been taking a number of proactive steps to protect the consumer against misleading advertising through DOCA, CCPA and strengthening the hands ofASCI. The Cable TV rules clearly says that no ads that violate the ASCI code can be run on TV and I am confident that similar provision will be incorporated in the appropriate legislations for Digital, Print and Radio in the months to come.
If consumer confidence in advertising is lost, the marketing, advertising and media community loses the most. If confidence goes up, this industry has a lot to gain.
Rakesh Sharma, President, Indian Newspaper Society
Since this would be the Vote on Account, the government hasn’t done any consultations with the stakeholders of any industry. I don’t expect any policy measures.
However, theprintindustry expects that the government waives the 5 percent import duty on the newsprint. Newspapers are imparting knowledge among the general public hence the industry should not be burdened with taxes.
Once the government is formed and will work on the full budget, we would present our set of demands. The tax imposed on import of high speed and state-of-art printing machines should also be waived. India doesn’t manufacture those machines and we have no other option but to import it.
Besides, the government should implement the fresh print ad rates (DAVP) as per the recommendations of the committee formed in 2019. The report has been submitted to the MIB but it hasn’t been made public yet.
Ashish Bhasin, Founder, The Bhasin Consulting Group
Since this budget will be a vote on account, I don't expect any spectacular changes in policies. From anad industryperspective, we hope that in the election year the government would take measures that result in more disposable income in consumers' hands, especially for rural consumers. This would be good for the overall economy and the advertising sector as well.
High time the Union government incentivised advertising, rather than taxing it heavily. Advertising is an investment which not only helps brands to grow but offers a multitude of benefits to the overall economy. If the government considers advertising and building brands as an investment, like R&D, rather than an expense, the tax burden would come down and brands would allocate more funds for advertising. This step will make Indian brands competitive with global brands.
Media agencies work on small margins, 1.5 to 2 percent of the overall advertising billing of the brands. They are levied a two percent TDS. How can their cash flows work? Then we have to pay GST (18 percent) implemented in each state separately. This makes the taxation process cumbersome. The government must simplify the entire process of taxation, direct and indirect, for the advertising industry.
The government is promotingONDCand digital adoption which requires a lot of thrust on digital infrastructure. After all, digital has emerged as the single largest medium of advertising. I expect that we will see a greater thrust on digital in the budget.
Shradha Agarwal, Founder and CEO- Grapes
This year's Union Budget aligns with the government's ambitious goal of reaching a GDP threshold of $5 trillion and India’s economy increasing by 9.2% in the next fiscal year.
Expectations are high for strategic cuts in taxes and duties aimed at boosting investments and savings. Also, in the advertising sector, there's optimism that these tax advantages, subsidies, or accessible credit would bring good opportunities, particularly for digital marketing and start-up businesses. This could play a crucial role in fostering inclusive and sustainable growth in Bharat while creating employment opportunities.
Moreover, as the advertising landscape evolves, I believe the major aspect is the call for increased investment in digitalization and infrastructure development to fuel the growth of digital and physical advertising opportunities. I anticipate the government will focus on increasing digital adoption, making it easier for advertisers and brands to reach a large audience.
Ambika Sharma, Founder and MD, Pulp Strategy
The advertising market is poised to reach $14 billion in 2024, marking an 11.4% surge. The digital format, contributing 46% to the advertising market share in India, is a key driver of this upward trend. Beyond fiscal growth – I aim for a digital renaissance, emphasizing a resilient cybersecurity infrastructure to protect industry data.
I hope the government strengthens the digital ecosystem, focusing on capital expenditure for infrastructure development to facilitate marketing and advertising opportunities. We advocate for tax breaks and incentives, serving as catalysts for innovation and entrepreneurial spirit in Budget 2024, empowering creative minds shaping India's digital narrative.
With technologies like 5G andWeb 3.0, the government should focus on creating accessible and affordable opportunities for M&E industries and MSMEs to engage with their audiences in an augmented world.
