DIPP bats for higher FDI cap in broadcasting sector

In a move aimed at rationalising foreign direct investment (FDI) in various areas of the broadcasting sector, the Department of Industrial Policy and Promotion (DIPP) has proposed to increase the FDI cap for direct-to-home (DTH) services, uplinking hubs, teleport services and FM radio.

This is in line with the recommendations of the Telecom Regulatory Authority of India (Trai) and the Ministry of Information and Broadcasting (I&B). DIPP is the government department responsible for formulation of the FDI policy, its approval and facilitation in the country.

In its submissions to the government, DIPP has proposed to increase the FDI cap to 74 per cent (from the current cap of 49 per cent) in DTH companies, uplink hubs and teleport services. However, companies will have to seek an approval from the Foreign Investment Promotion Board (FIPB) if the foreign investments exceed 49 per cent. The move may help half-a-dozen DTH operators whose combined losses may exceed Rs 3,000 crore in the current financial year.

DIPP, however, has made no changes in the existing FDI cap of 49 per cent for cable television networks, even though the cable TV industry has lobbied for increasing the FDI cap to 74 per cent. As a result, over 5,000 cable operators may find themselves on the backfoot as they directly compete with the DTH industry for business, industry experts say.

For FM radio, DIPP has proposed a 4 per cent increase in the FDI cap (from the existing 20 per cent to 24 per cent), subject to an approval from the FIPB. This move may help 40-odd private FM radio companies raise investments for the Phase-III of FM radio services, which may be announced within two months.

DIPP has also fixed a 74 per cent FDI cap for satellite radio and Headend-in-the-Sky (HITS) sectors as, till now, there was no FDI cap in both these services. The Union Cabinet had recently given its nod to the HITS policy — the new satellite-based cable distribution platform where cable TV signals can be distributed over the entire country at one go using a satellite instead of the tradition terrestrial transmission using cables.

DIPP has also made a formal proposal for permitting up to 100 per cent FDI for downlink of TV channels, subject to an approval from the FIPB if the FDI is over 49 per cent.