In a draft Cabinet note, the Department of Industrial Policy & Promotion (DIPP) under the commerce ministry has recommended a holistic review of foreign investment policy across the two sectors, but has left some areas untouched. While the FDI cap may be raised in the FM radio and direct-to-home (DTH) segments, no change has been recommended for cable TV and news channels.
Also, for the first time, foreign investment limit is likely to be set for satellite radio and headend-in-the-sky (HITS). Although mobile TV is expected to pick up once 3G (third generation) telecom services are introduced, the government is yet to make up its mind on the FDI ceiling in this segment.
In the private FM radio segment, DIPP has proposed to allow foreign investment up to 24%, subject to approval of the Foreign Investment Promotion Board (FIPB). Currently, foreign investment (FDI and FII together) is capped at 20% for FM radio. Although the Telecom Regulatory Authority of India (Trai) had recommended a 49% foreign investment limit for this media segment, the information and broadcasting (I&B) ministry felt it was not necessary to raise the cap to that extent.
For cable TV network, foreign investment up to 49% is permitted.
Even as Trai wanted the limit to be raised to 74% (on par with telecom), "the I&B ministry has felt that the implication of raising the limit would be that that the control would be passed on to the foreign partner, which may not be desirable in the light of the fact that cable network is still a predominant mode of distribution of broadcast channels and there is considerable sensitivity involved." Therefore, no change is being proposed in cable TV network.
In the case of DTH and uplinking hubs/ teleports, 74% of foreign investment is proposed. Currently, the foreign investment cap is at 49%, with FDI limit at 20%, in DTH.
For uplinking of news and current affairs channels, no change in the FDI limit has been proposed "for the present," though Trai wanted it hiked to 49% from the current 26%. For non-news channels, the new policy would stick to the 100% foreign investment limit.
As for downlinking of TV channels, it is proposed to "formally permit foreign investment up to 100%," says the internal note prepared by DIPP.
Currently, there is no policy for satellite radio, and therefore 100% FDI is allowed by default. But, the new policy is likely to set the FDI limit at 74% for satellite radio. Same is the case for HITS.
While there are various FDI rules for ISPs, now a uniform FDI limit of 74% is being set for all internet service providers. The DIPP note adds that no recommendation in regard of mobile TV is yet available and hence the same is not being covered.
The note, prepared for the Cabinet Committee on Economic Affairs, has been sent to the Department of Commerce, Department of Economic Affairs (finance ministry), Planning Commission, Department of Telecom, National Security Council Secretariat and the ministries of I&B and home affairs. It has also been sent to the Prime Minister's Office..