Terming as a positive steps, the Cable and Satellite Broadcasting Association of Asia (CASBAA) on Tuesday lauded the move by the Indian Government to enhance the Foreign Direct Investment (FDI) limit for media broadcasting companies to 74 per cent in some sector but demanded that this limit should be increased across the board rather than classifying them in different categories.
Experts and panellists attending the CASBAA conference being held here lauded the Indian Government’s move but felt that rather than bringing in caps in various sectors, the limit should be enhanced across the board to ensure inflow of latest technology and content. “The Indian industry needs an investment of nearly $4 billion to upgrade its present cable service industry and catch up the digitalisation programme unleashed by the Government for 2014. For this to happen on ground, it would require massive investments in this sector which is hardly available with the domestic players. It is this reason that it should be made 74 per cent across the board,’’ Deepak Jacob, Executive vice president and General Counsel, Star India Pvt Limited said at the conference.
He said it was important the Indian consumers and audiences were treated to latest technology upgrades in the broadcasting industry and also they were exposed to the digital revolution that is taking place at the international level. The Multi System Operators (MSOs) and the Local Cable Operators (LCOs) would play a major role in this. However, with funds being a big handicap with the domestic players, this industry required a massive inflow of FDI funds to prepare the country and its consumers for a real change. “We welcome the move to enhance the FDI limits that will throw open the industry to better management and funds inflow and hope that reforms in this sector will continue at a good pace. We are also happy that India has already taken a big step towards digitalisation of the cable services industry,’’ Simon Twiston Davies, CEO, CASBAA said.
The Department for Industrial Promotion and Policy if preparing a Cabinet note for allowing foreign firms to own up to 74 per cent of broadcasting companies. This is on the lines of the suggestions made by the telecom regulator, TRAI, a few months ago. At present, different FDI limits apply for different segments in the broadcasting industry and the regulator had suggested bringing uniformity and raising the limits.
The Government is unlikely to go ahead with a uniform 74 per cent policy but is likely to classify media broadcasting companies into two categories: news media and non-news media. While the FDI cap for news
media will continue at 26,per cent it is the non-news media which benefits more, with a higher FDI ceiling of 74% — up from the existing 49 per cent.
The DIPP is of the view that the new norms are expected to help the loss-making direct-to- home (DTH) industry and multi-system operators (MSOs). Besides, applications for FDI up to 26 per cent will be put on the automatic route. Currently, there are different FDI limits for different categories of media companies ranging from 20 per cent to 100 per cent with mandatory approvals required from the Foreign Investment Promotion Board.
All media entities engaged in the news business will continue to have a 26 per cent FDI cap. Private FM radio stations — which currently face an FDI limit of 20 per cent — will also get a higher limit at 26 per cent, once the third phase of FM radio privatisation (FM-III) is complete.
According to experts, the move is likely to help the fast-growing, six-player private DTH sector get more investments. This is because several leading DTH operators including Tata Sky, Sun Direct and DishTV have already hit the 20% FDI cap.