Most Operators (not just India but worldwide), in recent times, use H.264/AVC (aka MPEG 4) codec for both SD and HD channels and the new H.265/HEVC codec for Ultra HD (4K) channels.
In Europe, the "Minimum" bit rate acceptable is 4 Mbps for SD and 10 Mbps for HD channels. Of course, Sports content/channels need significantly higher bit rates.
Tata Sky may be using even " lower " bit rates to fit all their channels on the limited satellite transponders available. The CEO Harit Nagpal had acknowledged earlier that they are struggling for capacity.
Why did Tata Sky choose ISRO?
The DTH policy says that between an Indian and foreign satellite, the operator should give preference to the Indian satellite. In fact, Dish TV, the first DTH operator, started with ISRO and switched to a foreign satellite within six months, ditto for Airtel in 2010. Sun Direct lost customers when INSAT 4C, the satellite it was on, lost power all of a sudden (in 2010). But we stuck to ISRO - Harit Nagpal
Why can't Tata-Sky shift to another foreign satellite?
The choice of satellite is a lifetime decision, you can't change it just like that. A satellite operates in a certain orbital slot (83.0 E) towards which the antennae of all my 10 million customers are turned. If I shift to another satellite, we have to physically go to each of these homes and shift the antennae towards the other satellite. - Harit Nagpal
In comparison, Blu-ray discs use the same codec for HD content at 40 Mbps - hence the favourite of Videophiles.
My friend recorded a movie broadcast via Tata Sky on a " HD Channel " and the quality was significantly inferior to that of the same Blu-ray title available in the market.