The Telecom Regulatory Authority of India or Trai, which also regulates the broadcast sector, has recommended hiking foreign direct investment (FDI) limit for news television (TV) and private FM (frequency modulation) radio services to 49% from the current 26%.
Industry observers said the recommendation may well prove to be a silver lining for the TV industry which has been under pressure of late to reduce per-hour duration of advertisements.
Trai has also proposed to hike the FDI limit to 100% from 74% for distribution and carriage services such as direct-to-home (DTH) TV, cable networks and mobile TV.
In July, the information and broadcasting minister had sent a reference to Trai indicating that the government is re-examining the current FDI policy with a view to easing FDI inflows and raising the caps. It asked Trai to examine a proposal of the finance ministry for increasing FDI limits in media.
Trai’s move on Thursday is now expected to speed up the pace of digitisation across the country and help build information highways that could potentially support India’s economic development, including social infrastructure. It is also likely to help broadcasters reduce their dependence on revenue through advertisements.
“These recommendations broadly pertain to three segments of the broadcasting sector: broadcast carriage services, television content services and FM radio services,” Trai said in a statement.
“The FDI limit for the broadcast carriage services has been recommended for enhancement to 100% and that for uplinking of ‘News and Current Affairs’ TV channels and FM radio services to 49%. It has also been recommended that the FIPB (Foreign Investment Promotion Board) approval process be streamlined and made time-bound.”
According to many stakeholders, 100% FDI -- complete ownership -- may also attract investors who wish to bring in state-of-the-art proprietary technology.
A teleport operator has expressed the opinion that the very presence of foreign firms contributes to overall productivity, aids the cause of competition as domestic industry gradually replicates and builds up the best practices institutionalised by such foreign firms.
Thus, allowing such foreign firms to have an establishment in the country also enables better enforcement of checks and balances and ensures greater accountability, experts said.
FDI, however, will be allowed only after it has been cleared by the FIPB.