CATV and broadband is currently taxed at a total of 15.3 per cent in addition to a 4.3 per cent octroi against just four per cent for other Information Technology related products.

"The high taxation in Maharashtra is proving to be a hindrance for promotion of the growth of broadband delivery, Internet penetration, computer networking and computer literacy in the state," said Mr Manilal Gala, secretary, All India Radio and Electronics Association.

The sales tax structure has forced several units in the highly competitive cable TV industry to either shut down completely or shift operations to lower tax locations such as Gujarat, Andhra Pradesh and New Delhi.

Maharashtra was one of the first bases in which cable TV hardware was manufactured in the country. Maharashtra, Mr Gala said, needs to lead the way by lowering sales tax to the level of IT products by recognising the fact that it is "these broadband products that are going to make available infrastructure for Internet access." The products are a part of Hybrid Fibre Coaxial (HFC) broadband networks that are meant to carry services much beyond cable TV. "While fibre optics enjoys lower taxation, it is surprising that even though it is used at the core of every large CATV HFC broadband network, other CATV broadband coaxial cable hardware is still taxed at a prohibitive 15.3 per cent," Mr Gala said.

"The state is going to lose out on the speedy build of infrastructure simply because higher or non-rationalised tax structures are discouraging investments for Maharashtra.