Media and Entertainment

Members Only

The vibrant media and entertainment industries of the U.S. and India are known throughout the world for their content and technology. Much has already been gained by collaboration. Yet there are ominous signs of protectionism that can spoil opportunities for both sides. Government must be urged to let the market work and not try to manage the economics of
these industries.

India's cable television industry has grown to be one of the world's largest due to a light regulatory touch. Since 2004 the telecom regulator, TRAI, has been active in introducing regulations into the market. While many of these regulatory changes have been welcomed by industry, some, such as price controls, have harmed the television industry's growth potential. At the same time, new services such as DTH satellite TV and IPTV have been launched and are gaining impressive momentum.

India has one of the world's largest movie industries, in terms of number of films produced and number of tickets purchased. American films are allowed open access to the market, but face very high levels of intellectual property infringement from various sources (illegal screenings, illegal distribution through local cable TV, pirated optical disks). Indian films face the same intellectual property problems, though have not been able to effectively organize countermeasures to this piracy.

The Executive Committee on Media & Entertainment is focusing on several important objectives for 2011, including:

• IT Act Implementation: Continue broad engagement with the Government of India to ensure that future regulations implementing the IT Act and 2008 Amendments are transparent and conform to international norms and best practices, particularly Sections 79 and 84.

Ensure that the GOI applies international best practices to encryption policy by (a) raising India's encryption level to 128-bits at a minimum with no requirement for encryption key deposit or plain text translations for ISP acting as mere conduits, and (b) the elimination of ISP intermediary liability.

• Tax Policy: For India to remain cutting edge and globally competitive, a predictable tax environment must be the norm, not the exception – with a transparent Alternate Dispute Resolution mechanism in place to quickly remedy conflicts. India's ad hoc application of Permanent Establishment rulings and Transfer Pricing assessments are eroding India's competitive edge. USIBC will work with the Government and other key stakeholders to:

Lobby the GOI to treat transfer pricing and permanent establishment principles in-line with international best practices, both in terms of transfer pricing mark-ups and the definition of what qualifies as a permanent establishment.

Push for the establishment of Advance Pricing Mechanism to provide clarity and predictability to foreign firms on their future tax liabilities.

• TRAI Regulatory Policy Making: Lobby the Telecoms Regulatory Authority (TRAI) to extend the comment period for all draft rules, regulations and discussion papers.
   
• Price Controls on the Television Industry: Advocate for the TRAI to lift existing restrictions on pay channel pricing. Specifically, press the TRAI to announce precise criteria and/or timelines detailing when price controls could be lifted.
   
• Comprehensive optical disk legislation: Actively engage the new Government on optical disc legislation. Work with the Motion Picture Association and other stakeholders to make the legislation a top priority for the GOI. Although the focus will be to engage the new government, USIBC will continue good-faith efforts to engage with Moser Baer.
   
• Valuation of film & video imports: Continue to press the GOI to follow best practices in treating the master as dutiable only on the medium, not the expected revenue.
   
• Information and Communications Technology (ICT) Dialogue: Building on the highly successful December USIBC mission to Delhi, USIBC will work with member companies, TIA, Tech America, and the U.S. and Indian Governments to plan and execute future meetings in Washington and New Delhi.

Secretariat: Michael DiPaula-Coyle, USIBC