The Hindu Business Line : FII's fresh foothold

CURIOUSLY, media reaction has been muted to the official announcement allowing the entry of foreign institutional investors, NRIs and portfolio investors in the print sector.

The media may be taking it in its stride because the UPA Government has only followed in the footsteps of the NDA Government which, in June 2002, opened up news and current affairs publications to FDI subject to a cap of 26 per cent.

The new policy also envisages the same limit for all the different categories of investment put together.

It is natural for the media not wanting to seem illiberal with reference to itself while pressing for a general loosening of the Government's hold on other sectors of the economy.

Any opposition on its part to enlarging the scope for foreign investment in the print media may seem an admission of some inherent vulnerability, especially at a time when it would like to exude a spirit of self-confidence and willingness to take on competition, befitting an entity that has come of age.

Also, it pays for the media to keep its options open in view of the emerging possibilities of striking new deals and forging new alliances taking advantage of the Government's announcement.

Whatever that be, the infusion of FDI in 2002 was conditional upon certain safeguards to ensure that the management continued to remain in Indian hands.

For instance, the single largest Indian investor was required to have a significantly higher stake than the foreign shareholders, prior Government approval was to be taken for any change in the pattern of shareholding and three-fourth of the board of directors and all key editorial personnel were to be Indians.

All foreign investors were also to be screened by the Home Ministry from the security angle.

It is not clear whether the earlier safeguards, which are still valid, will continue to apply under the new policy.

The only substantive restriction it imposes is against bringing out Indian editions of foreign newspapers, but this may make no material difference since the content of facsimile editions which have been permitted can always be manipulated to circumvent the bar.

It is advisable for an independent body like the RBI to go into the operational implications so as to avoid future embarrassments.

B. S. Raghavan

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