Companies & Sectors
India needs to focus more on digital infrastructure: James Murdoch

With digitization, the Indian industry will finally have the incentives to invest and create. Even more important, local customers will have the content and choice—worthy of the nation’s rich diversity

India has around 120 million TV households and yet there are only about 30 million home which have digital channels. This shows the need for the country to focus more on creating digital infrastructure said James Murdoch, chairman and chief executive, News Corp, Europe and Asia.

Speaking at the FICCI FRAMES 2011 in Mumbai today, he said, "Digitisation brings content distribution and connectivity together-and helps them come alive. That is why the nations most determined to modernise their economies have put digital infrastructure at the top of their priorities. Digitization needs funding, it's true. So it is crucially important to relax investment and ownership regulations and align them to this objective."

Though India has a large population, its creative potential remains below expectations. "If India's economy had a creative sector on the scale, relative to overall GDP, of Britain's, for example, instead of a $15-billion industry we would be talking about a $120-billion industry," Mr Murdoch said.

"Digitisation is the key to unlocking the potential of the creative sector. With digitisation, the Indian industry will finally have the incentives to invest and create. Even more important, Indian customers will have the content and choice worthy of their nation's rich diversity. The second area is what we can do to bring Indian creators, storytellers, and journalists to the world's conversations. And this can only be done by ensuring that India's creative market is competitive at home," he added.

AT present there are 550 TV channels in the country out of which around 400 are active. There are 106 channels which still use the analogue system to broadcast signals to 90 million homes. In addition, there are 300 TV channels ready to start broadcasting the moment they get licenses. Due to the dearth of digital infrastructure, broadcasters are forced to use analogue system and pay more money as carriage fees.

Mr Murdoch said, "When competition is stifled by infrastructure, the scarcity of bandwidth drives the operator to price channel placement instead of investing in greater capacity. This makes things more expensive for the channel operator who has to recoup that higher cost out of advertising, spread ever so thinly across a fragmenting audience."

India is a young country-and there are more mobile devices than TV sets in country. In order to reach out more to the audience, content providers from the media need to cater to this segment as well.
"In India, there is more demand and scope for content for handheld devices," said Sachin Pilot, minister of state for communications and IT. He assured all possible help to the media and entertainment industry from the government.

During the inaugural session, FICCI and KPMG released a report on Indian media and entertainment (M&E), which expects the segment to grow at a compounded annual growth rate (CAGR) of 14% to $28 billion by 2015, due to positive industry sentiment and growing media consumption. (Read FICCI-KPMG expects Indian media and entertainment industry to touch $28 billion by 2015:).


Carmakers face challenges from Japan crisis, rate hikes

A shortage of components compounded by the 11th March tsunami and quake in Japan and RBI's rate hikes-which could affect car financing-have made carmakers jittery in the short-to-medium-term

Mumbai: Faced with surging raw material costs, Indian carmakers now face three additional serious challenges, including a shortage of key components, which could impact their performance this year, reports PTI.

While they could pass on the burden of increased input costs to customers, a shortage of components compounded by the 11th March tsunami and quake in Japan and Reserve Bank of India's (RBI) rate hikes-which could affect car financing-have made them jittery over their prospects in the short-to-medium-term.

"Yes, the industry is facing problems, but we are taking it as a big challenge. We think this is a passing phase-we see light at the end of tunnel," General Motors India vice-president P Balendran told PTI here.

A shortage of critical components, many of them sourced from Japan where many automobile facilities, besides others, have been damaged by the powerful quake, has made the going tough for the industry which is likely to find it difficult to meet its sales target, he said.

"Frankly, it is difficult to meet earlier projected (sales) figure this time. A shortage of components, including tyres, casting and steel, has made things difficult," he said.

The hike in key rates by the RBI, which is expected to push up interest rates on auto loans, could deter potential buyers, Mr Balendran said.

The General Motors executive said "It is difficult to predict a timeline for the problems to be resolved."

Home-grown auto major Mahindra & Mahindra (M&M) is confident of the long-term potential of the industry, but feels the sector is likely to be stymied by the Japanese crisis and RBI rate hike in the shot term.

"Commodity prices have been increasing in the last few months and now the Japan calamity will affect supplies of auto components. The rate hikes by the RBI could add to the industry's woes," said Pawan Goenka, M&M's president (automotive).
The RBI recently hiked both its repo and reverse repo rates by 0.25% each to 6.75% and 5.75%, respectively, for the eighth time since March 2010. This, in turn is likely to push up cost of loans for customers.

Auto majors like Honda Siel Cars India and Tata Motors have already indicated that they would be upping their product prices from 1st April to offset rising input costs and more are expected to follow suit.

Vijay Kedia, director of three-wheeler maker Atul Auto said, "Imports of some automobile components from Japan will be affected in the short-term. The growing (auto) industry is sandwiched between surging input costs and meeting increasing demand."

Following the rate hikes, he said, there could be a slackening in demand. "People will not be encouraged to buy more vehicles through financiers this time due to the recent rate hikes by the central bank. It may slow down demand in the coming weeks."

Admitting that the present situation was "challenging" Ford India president and managing director Michael Boneham exuded confidence that the tough times would be "short-lived".

"The Indian auto industry, in general, is clocking an unprecedented growth in sales. Though the Japanese tsunami and the RBI rate hikes present challenges to the industry, it will be able to overcome them," he said.


Fed execs: The US is coming back on track

According to two top Fed officials, the recovery is gaining traction-but inflation remains a concern.

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