FDI limit hiked across broadcast media; industry welcomes move

FDI limit for up linking of news and current affairs television channels and radio increased from 26% to 49%. No FDI limit for non-news channels and distribution space

BestMediaInfo Bureau | Delhi | November 12, 2015

The Indian broadcast sector celebrated this Diwali with increased FDI limits as a bonus from the government. The government not only increased foreign direct investment limits in several segments, but it also removed the barriers completely in some verticals.

According to the cabinet decision taken on Tuesday, FDI limit for up linking of news and current affairs for television channels has been increased from 26 per cent to 49 per cent. For non-news and current affairs channels, the government has allowed 100 per cent FDI through the automatic route.

Broadcast distribution space including cable TV networks (multi-system operators and local cable operators), DTH, teleport, HITS and mobile TV has been made free of any FDI limit where it was previously 74 per cent. Distribution platforms can raise as much as 49 per cent FDI through the automatic route. If companies want to go beyond that, they will need government approval.

In the radio broadcast sector, the limit has been increased to 49 per cent from 26 per cent.

With an aim to expedite its foreign direct investment (FDI) clearance process, the government on Tuesday enhanced the Foreign Investment Promotion Board's monetary limit to approve proposals of up to Rs 5,000 crore. Earlier, FIPB, which is headed by the Economic Affairs Secretary, was allowed to approve foreign investment proposals of worth up to Rs 3,000 crore.

Sudhanshu Vats

Sudhanshu Vats, Group CEO, Viacom18 and Chairman, CII National Committee, Media and Entertainment, said, “Today's announcement emphasizes the need to align more industries to the automatic route of FDI, over the government regulated route, to enhance ease of raising capital. The increase in the FIPB limit from INR 3000 crore to INR 5000 crore expands its financial ambit thereby allowing for an increase in the quantum of proposals of interest.  By opening up certain industries the focus will shift to exploring newer markets with growth potential. For the Media and Entertainment industry in particular, the news broadcasters, radio, mobile TV market, cable broadband networks and DTH will witness accelerated investor interest.”

Vineet Singh Hukmani

Vineet Singh Hukmani, Managing Director, Radio One, said, "It's a welcome move but the timing of it could have been much better/earlier given that players have just raised funds and signed GOPA for phase 3. Hope the government includes ECB in their definition that will allow players to get funds at a cheaper cost externally. The government must also ease restrictions like news, must rationalize annual license fee, ease import duties, and improve transparency in the functioning of Prasar Bharti and BECIL if they are serious about attracting foreign investment."

Nisha Narayanan

Nisha Narayanan, COO, Red FM, said, "We welcome the increase in the FDI limit to 49% in radio. This was recommended well before by the Mayaram committee and we were expecting it to come earlier. However, we are extremely excited by this move since any foreign investor is looking at taking at least a 49% share so that they can exercise some sort of control. This should get in foreign investment in the sector which is needed for the expansion of the radio sector. Apart from the monies, the foreign investors will also get in best international practices and also new ideas and different formats that we can experiment with. However we do hope that the Ministry notifies this policy soon in their policy documents since this cannot be implemented by the industry till the MIB notifies it and we so hope they do it immediately and definitely before second batch of e-auctions of Phase 3. All in all we do hope that this takes the sector to higher levels and we are sure that the sector will benefit immensely. It is exciting times ahead for the industry."

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