Sources said a Cabinet note is being prepared for which inter-ministerial discussions are on regarding the conditions and process of leasing out frequency bands to private players. The ministry is planning to allow over 10 players to run channels in four metro cities and other centres, where FM is available.

It is believed that I&B ministry is planning to allow private players to run their own separate channels on frequencies leased by the AIR.

The ministry is, however, yet to take a view on whether the allocation of frequencies would be through open tender bidding or via licensing.

Once the modalities are finalised the note would be put before the Cabinet for final approval.

Significantly, in the last bidding conducted by Prasar Bharati for auctioning airtime on the existing FM channel, the clause regarding 20 per cent foreign equity wasremoved since, the I&B ministry felt that as per the draft, the Broadcasting Bill contained no provision for allowing foreign equity in terrestrial broadcasting.

In a revised draft of the same Bill prepared under the BJP-led government, a clause was included to open up terrestrial broadcasting to private players. BJP's previous election manifesto, however, mentioned a 20 per cent cap on foreign equity in the broadcasting sector. The government has decided to allow 100 per cent foreign equity in software companies which include films.

In the earlier two bids conducted by AIR, the tender documents specified 20 per cent foreign equity limit in companies interested in procuring airtime as an important criterion for being considered as a bidder.

All the auctions held by AIR so far have been nullified because of cases filed by various applicants against the government.

Another important criterion which would be strictly followed, according to sources, is that of the clause regarding "related companies"implying that two companies with common board members will not be allowed to hold more than one licence.

The move comes in the wake of I&B minister Pramod Mahajan's drive towards better commercial performance on Doordarshan's and All India Radio's part.