The government is likely to extend the July 31 deadline for granting a preferential Customs duty rate on imported set-top boxes.

Government officials indicated this to representatives of domestic set-top box manufacturers in a meeting earlier this week.

The perception is that domestic manufacturers are not yet in a position to produce these boxes, required to effectively roll out the conditional access system, at affordable rates.

The government had slashed the import duty on set-top boxes by about 45 per cent in May.

The effective cut, however, from 50.8 per cent to 5 per cent was to be valid till July 31. On June 24, the government also withdrew the 16 per cent excise duty to make local manufacturing viable.

The domestic manufacturers contended that after the excise duty was reduced to zero, they would be able to offer both analog and digital boxes at a premium of Rs 300-400 over imported boxes.

They said the domestic industry was in a position to produce two million sets in the first year in keeping with the demand.

But if the prices had to be further reduced, sales tax should be brought down to 4 per cent from 8 per cent or 12 per cent as applicable now in different states, they added.

Local manufacturing will also create additional employment within the country.

An industry source said the manufacturers had volunteered to take up the issue of lowering sales tax with the state government since the Centre was not taking any initiative at the moment.

"In the long run, set-top boxes will be manufactured locally. We don't see why India cannot become a global sourcing hub for set-top boxes like China or Taiwan if we can achieve competitive costs. The government has to promote this industry and start it in earnest right now," he said.

He also pointed out that the domestic industry was churning out around eight million television sets per annum and manufacturing of set-top boxes was easier.

However, government officials said they did not conform to the domestic manufacturers' views that the industry could roll out two million sets -- 80 per cent of which will be digital -- at competitive prices this year.

The government needs to take care of the interest of the consumer. It does not seem like the Centre will promote expensive local manufacturing ahead of the general elections.

The multi-system operators on the other hand have been pushing for cheap imports. So far, their efforts have yielded results.

Among the potential domestic manufacturers are some big names like Bharti, Philips, Thomson, Motorola, Salora, Cnet and Catvision.

Brands that are being imported are Humax and KaonMedia (Korea), Eastern and Zinwell (Taiwan), V-Tech and X-Com (Hong Kong K), Dalbi (UK), MDI, Coship (China), Nokia (Finland) and Pace (US).