The India Set-Top Box market (STB) is to grow at a CAGR of 26 percent over the period 2012-2016. One of the key factors contributing to this market growth is the compulsory digitalization requirement of the Telecom Regulatory Authority of India (TRAI). The STB market in India has also been witnessing an increased number of government regulations that favor domestic vendors. However, intense competition among vendors could pose a challenge to the growth of this market.
An increase in the import duty of STBs by 5-6 percent paves a way for the new domestic entrants in this market. With the expected digitalization by the end of 2014, there would be an increase in the demand for STB with more than 50 million units in the next two years. This would enable the domestic vendors to meet the demand by supplying the STBs produced domestically. Overall, domestic vendors could competitively price their STBs by having economies of scale and low manufacturing cost. Hence, the increase in the import duty of STBs in India is expected to have favorable impact on the budding companies that want to make their foothold in the STB market in India.
One of the major drivers is the ordinance to mandate the digitalization by TRAI. In December 2012, TRAI notified that by the end of 2014, a complete transition of households from analog to digital system should be done. This regulation has drastically increased the demand for STBs in India.
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