Govt mulls FDI increase for private FM stations

By Justin Thomas , afaqs!, New Delhi | In Media Publishing | October 17, 2008
I&B Ministry officials indicate that the government is seriously considering increase in FDI for private FM stations

After a & #BANNER1 & # long period of inaction over the issue of increasing foreign direct investment (FDI) in private radio stations, the government is waking up and now plans to reach a decision soon on the issue.

Speaking to afaqs!, an official from the Ministry of Information and Broadcasting says, "The issue is being vetted by the ministry and will be sent to the cabinet soon." However, the official refused to indicate the quantum of increase, saying it would be premature to speculate until the decision was finalised.

Currently, the FDI in radio is fixed at 20 per cent. The Telecom Regulatory Authority of India (TRAI) had suggested raising the foreign equity limit in FM stations airing news and current affairs programmes to 26 per cent; for FM radios stations that are focused on entertainment, the TRAI suggested raising the limit to 49 per cent.

The government has been non-committal on the issue for a long time. A month back, it had allowed FM broadcasting companies to create subsidiaries and even go in for mergers/demergers and amalgamation of companies through transfer of shares. However, the new corporate entities were supposed to maintain their FDI component within the prescribed limit.

Increase in FDI will boost the growing radio sector. Besides funding, it will bring in benefits such as new technology, international best practices and access to export markets.

Though the TRAI had recommended an increase in FDI, it had also sounded a word of caution that several countries have been cautious in relaxing restrictions on foreign ownership in the media sector for a number of reasons. The important among them include preserving cultural knowledge, practices, social and cultural values as well as national security concerns.

Industry players have also evinced keen interest in the increase of FDI and a few are hopeful that the issue will be resolved soon. Hopefully, this time around, the government will be more proactive.