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Recognising Sports as an Industry key to sports development in India: CII-KPMG Report
Feb 25, 2014

CII-KPMG report released at CII’s Sports Conference – ‘SCORECARD 2014 - Business of Sports’

New Delhi, February 25, 2014: Today KPMG under the aegis of CII released a report titled “Business of Sports - Shaping a Successful Innings for the Indian Sports Industry”. The report identifies key issues in the sports ecosystem and explores measures to develop a private-investment led sporting scenario in the country – one that helps imbibe a sporting culture and achieve the country’s vision of excellence in sports.

The reports states that resource scarcity in India makes it difficult for the Government to attain the above objectives and calls for collaborative efforts of both the Government and private sector towards strengthening the sports ecosystem. Long term sustainability of commercial ventures in the Indian sports sector would require sustained audience interest driven by India’s winning performances at international sporting events.

Sports not only boost the youth and instil pride among citizens, but also facilitate social and economic development of a nation. Sports sector is seen to have a significant socio-economic impact worldwide contributing to 1-5% of national GDP.  This can be achieved by building a sporting culture in the country.

However, in India sports is not recognised as an industry yet, limiting corporate investments except in cricket and a few other leagues. Being home to various upcoming leagues and the youngest population in the world, India’s sports sector offers tremendous growth potential.

Ajit M Sharan, Secretary, Ministry of Youth Affairs & Sports released the CII - KPMG report at the Scorecard 2014, CII’s National conference on Sports. 

Earlier Atul Singh, Chairman, CII National Committee on Sports and Group President (Asia), The Coca Cola Company, highlighted Industry’s role of “going beyond Sponsorships and CSR activity and the need for a policy shift to recognize Sports as an industry”.  He said, “this would help actualize the India@75 vision for broad-basing sports in India, and promote excellence in Sports, by promoting infrastructure development, providing technical support for athletes, as well as grooming talented sportspersons”.

“Corporate funding in sports may be the answer to ignite sports development in India. The gestation period for realizing return on such investments may be long, but global experience shows us that it could be potentially rewarding’, added Jaideep Ghosh, Partner, KPMG in India

Global sports industry is estimated to be worth around US$ 600 billion and growing at a rate higher than national gross domestic product rates around the world. While direct sports revenues are dominated by gate collections, sponsorships, media rights, the sports sector may comprise several segments such as sports tourism, sporting equipment manufacturing and retail, sports apparel, recreational sports, high school and college athletics, as well as associated businesses such as sports marketing, sports medicine, venues & infrastructure, hospitality and merchandising.

Key issues and recommendations

Some key issues have been identified across various segments of the ecosystem and a set of recommendations have been suggested to drive their resolution. .

Segment of the ecosystem

Issue

Recommendation

 

 

 

 

 

 

Overall

Lack of sports culture in India

 

• Nationwide campaign to raise awareness on sports

• Implementation of a uniform sports policy across all states

• Active regional/local media supporting the cause of developing sports in India

Limited funding avenues in sports

 

• Provision of industry status to sports Sports governance

 

 

Sports Governance

Lack of transparency

 

• Strict implementation of the Sports Bill 2013

Limited community-level engagement in sports despite the Panchayat Yuva Krida

Aur Khel Abhiyan (PYKKA)

 

• Incorporation of a community-level Engagement Team under the aegis of Ministry of Youth Affairs and Sports(MYAS) which may also help NSFs organise competitions

 

Limited commercial focus of governing  bodies

 

• Institution of a Corporate Relations Team under the aegis of MYAS that could help  Sports Authority of India (SAI) and the community-level Engagement team to deliver on their plans

 

 

 

Talent scouting and training of players and trainers

 

Lack of coordination among the concerned bodies affecting professional uptake of sports

 

• Identifying and promoting collaboration among all concerned stakeholders to encourage more innovative business collaborations

Lack of coaches and technical know-how on sports in India

• Collaboration between SAI and National Sports Federations (NSFs) to train coaches

Scarcity of playing spaces and high capital expenditure required to establish private training academies

 

• Allowing access of public infrastructure to private training academies in lieu of reasonable fees

• Consideration of alternative modes of financing such as revenues from naming rights by private academy owners

Imposition of customs duty on training equipment imported by private academies vs. duty exemption on the same import by the Government

• Relief/exemption from duty for private academies if the equipment is imported for academy players who have consistently performed well at the inter-state or national level or above

Inadequate support to former sportspersons launching private academies

 

• Continued increase of public-private fund such as the National Sports Development Fund (NSDF) could provide financial support to upcoming academies

 

 

 

 

Talent scouting and training of players and trainers

 

Lack of awareness on opportunities for sports coaches

 

• Central and state Governments and NSFs may promote awareness on opportunities for sport coaches by providing case studies on typical career paths, opportunities for further development and companies’ recruiting coaches

Lack of specialized courses in nutrition, sports medicine and psychology

• Evaluation of demand by the Government for these courses and the establishment of lucrative incentives by the Government for their inclusion in existing private and public Universities

 

 

 

 

Sports infrastructure

 

 

 

Sports infrastructure         ( Contd.)

Insufficient legacy planning for various games hosted by India leading to poor asset monetisation

 

• Legacy planning to be done before the construction of stadia/assets begins in order to incorporate future requirements post international events as per the legacy plan into design of assets

Limited implementation of existing schemes

 

• Mandatory implementation and periodic review by the Central Government on the status of implementation of schemes such as PYKKA and National Playing Fields Association of India(NPFAI), at the state level

 

 

 

Limited corporate investment in sports infrastructure development

• Revision of policies and consideration of methods such as innovative PPP models by the Government to attract corporate investment in sports.

• Creation of repository of case studies of successful instances of corporate investment in infrastructure Sports equipment Lack of a unified representation for the sports equipment industry

 

 

 

Sports equipment

Lack of a unified representation for the sports equipment industry

• Integration of sports apparel exports with the Sports Goods Export Promotion Council (SGEPC) for holistic promotion of the sports products sector

Non-recognition of some sports training import items as sports goods

 

• Government policy could be targeted at bucketing some equipment for sports training under sports goods and levying customs duty accordingly, for instance wrestling mats and boxing gloves may be treated as just sports goods and not classified under generic gloves and mats

 

 

 

Leagues and tournaments

 

Lack of transparency in the governance of leagues

• Implementation of a uniform robust legal framework for governance across all leagues

Poor monetization of leagues

• Better packaging of events can make the leagues spectator friendly

Limited engagement of franchises with local communities

• Concentrated efforts by franchises to engage with local community to build fan base and, hence, attract audiences

 

Performance incentives for sportspersons

 

Lack of policy ensuring financial security post-retirement for some players

• Collaboration among NSFs and sports consulting firms to plan players’ careers post-retirement

 

Limited career options within the sports ecosystem

• Provision of industry status to sports

 

• Active collaboration among stakeholders to help strengthen the commercial aspect of leagues and franchises.

Direct tax

 

• Lack of clarity on the:

–– Rates at which prize money and unguaranteed participation fee would be taxed.

–– Taxability of global sponsorship and advertisement revenue and prize money i.e., whether to tax global sponsorship, advertisement revenue and prize money in India and to what extent.

–– Taxation mechanism if there is a triangular treaty scenario.

 

 

About CII

The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the development of India, partnering industry, Government, and civil society, through advisory and consultative processes.

CII is a non-government, not-for-profit, industry-led and industry-managed organization, playing a proactive role in India's development process. Founded in 1895, India's premier business association has over 7100 members, from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 90,000 enterprises from around 257 national and regional sectoral industry bodies.

CII charts change by working closely with Government on policy issues, interfacing with thought leaders, and enhancing efficiency, competitiveness and business opportunities for industry through a range of specialized services and strategic global linkages. It also provides a platform for consensus-building and networking on key issues.

About KPMG in India

KPMG in India is the Indian member firm of KPMG International and was established in September 1993. It strives to provide rapid, performance-based, industry-focused and technology-enabled services, which reflect a shared knowledge of global and local industries and its experience of the Indian business environment. KPMG in India provides services to over 2,700 international and national clients in India and has offices in Ahmadabad, Bangalore, Chandigarh, Chennai, Delhi, Hyderabad, Kochi, Kolkata, Mumbai and Pune.

www.kpmg.com/in

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