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Economy Aug 22, 2013

TRAI suggests easing of FDI limit for broadcasters, FM radio to 49%

By Sindhu Bhattacharya

New Delhi: This may well provide much needed cheer to the financially stressed television broadcasters. Regulator TRAI today recommended that the limit on Foreign Direct Investment for uplinking news and current affairs TV channels be increased to 49 percent from the current 26 percent. But the FDI will only be allowed after it has been cleared by the Foreign Investment Promotion Board.

This will help broadcasters reduce their dependence on advertisement revenues and help them access resources for their channels at competitive rates. Coming as it does when the Ministry of Information and Broadcasting as well the broadcasters are unhappy over TRAI's cap on advertisements, the regulator's recommendations would be more than welcome.

Reuters

This will help broadcasters reduce their dependence on advertisement revenues and help them access resources for their channels at competitive rates. Reuters

TRAI has said that existing guidelines and checks on FDI in news channels will continue as before. This means i) requirement to employ resident Indians in key positions (CEO of the applicant company, 3/4th of the Directors on the Board of Directors, all key executives and editorial staff), ii) the largest Indian shareholder should hold at least 51% of the total equity, iii) reporting requirements when any person who is not a resident Indian is employed/ engaged etc.

In case any news channel gets FDI up to 49 percent, the remaining 51 percent equity of the company will have to be held by a single Indian entity/ Indian shareholder.

Not just uplinking of news channels, the TRAI has also similarly freed up FDI investment on FM Radio by allowing up to 49 percent investment through the FDI route. But it has not imposed any FDI cap for uplinking of non-news and current affairs TV Channels and their downlinking. However, as in all other cases here too FDI will be approved only after FIPB nod.

TRAI's move should be welcome news for broadcasters as well as those operating FM radio channels; also growing convergence between broadcast and telecom sector will help ensure level playing between competing technologies. Recently, the Government removed all caps on FDI in the telecom sector too.

"Keeping in mind the fact that the ongoing digitisation of the cable TV services in the country would give a big impetus to the convergence of the broadcasting and telecom infrastructures, the same limits and route ought to be made applicable to the carriage services in the broadcasting sector," TRAI had suggested in its consultation paper on this subject last month.

The regulator had sought stakeholders' views on whether any changes are required in uplinking guidelines to safeguard editorial and management control but decided against making any changes what so ever. Currently, there are conditions such as employing resident Indians at key positions and that the largest Indian shareholder should hold at least 51 per cent of the total equity, among others, to this effect. TRAI has said that with an enhanced FDI cap, the remaining Indian shareholding would have to be with a single Indian shareholder.

Also, it has stuck to its earlier view that instead of using FDI limits to check on undesirable content on news channels, a proper content code should be put in place to check on airing of any such content.

by Sindhu Bhattacharya

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