The Hindu Business Line : Rethink on FDI cap in broadcast sector

Concerned with the sensitivity linked to the broadcasting sector, the Telecom Regulatory Authority of India (TRAI) is examining whether or not to keep out this sector from the foreign direct investment (FDI) regulations notified under Press Notes 2 and 4.

The Press Notes 2 and 4 had stated that downstream foreign investment into a non-operating Indian holding company would not be considered while determining the FDI cap in each sector.

However, the Information and Broadcasting (I&B) Ministry has sought TRAI's views on implementing Press Notes 2 and 4 for the broadcasting sector.

The TRAI had earlier recommended that FDI cap on broadcasting carriage services be brought up to 74 per cent.

This was done to bring it at par with the FDI norms governing the telecom sector. TRAI had, however, kept the FDI cap for content services at 49 per cent.

In a consultation paper issued last week, TRAI said that some stakeholders had raised concerns that in the light of Press Notes 2 and 4, much higher foreign equity is possible because even up to 49.99 per cent foreign investment in the investing company would be counted as nil as per the new method of calculating indirect foreign investment.

“Another view is that the broadcasting sector, being sensitive in nature, should be taken out of the ambit of Press Notes 2 and 4 of 2009, and the foreign investment limit should be calculated under the earlier methodology,” TRAI said in the consultation paper.

TRAI has invited all stakeholders to respond to the issues raised in the consultation paper by January 30. In an earlier recommendation,

TRAI had proposed an increased FDI cap in cable network, Direct-to-Home (DTH) and Uplinking Hub/Teleport to 74 per cent from current 49 per cent. It had also recommended increased FDI cap in FM radio to 49 per cent from 20 per cent.

The I&B Ministry will take a final decision on the proposed increase in FDI cap after TRAI submits its new recommendations.

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