Dish TV?s plans of raising $150 million through foreign currency convertible bonds (FCCBs) has hit a roadblock with the Foreign Investment Promotion Board (FIPB) deferring the proposal on the grounds that overall foreign investment in the company may breach the stipulated 49% sectoral cap.

The deferment follows major objection by the department of economic affairs in the finance ministry, which in fact, opined that the company be advised that it scales back the present FII investment.

The company was hoping to invest the money for expanding its customer base, which was slightly over 5 million in the previous fiscal.

In its application to the FIPB, Zee group?s DTH arm had said that it was planning to set up a joint venture for producing telecommunication equipment and provide management and marketing services in mobile satellite communications. Its proposed foreign partners were Afro-Asian Satellite Communication, Delgrada Ltd and Lazarus Investment.

According to sources in the know of the FIPB meeting to discuss the issue, ?The DEA had pointed out that an RBI master circular revealed that the application was inelegible since issuance of FCCB has to be in compliance with the ECB guidelines and even if it is treated as software, it is limited to $100 million a year”.?

Secondly, the department of industrial policy and promotion (DIPP) also stated that the FDI and the FII investment should not exceed the sectoral cap of 49%, with the FDI limit not exceeding 20% of the paid-up capital of the company. However, sources said that finance ministry officials stated that the FII limit for the company must be scaled down so that the overall investment stays below 49%, including the existing and the proposed on conversion.

The Finmin said, ?The information & broadcasting ministry must advise compliance that the balance ownership is Indian owned and controlled and the Cable TV Network (Regulation) Act requires that not less than 51% of the paid-up share capital is held by citizens of India.

The department of telecommunications and the I&B also requested for the deferment of the proposal.