Come Diwali, the broadcasting sector is set to get another government bonus in terms of a substantial hike in FDI caps for carriage platforms ? DTH, IPTV, Mobile TV, HITS and Cable Networks. This comes days after the Cabinet nod for cable digitalisation.
The government is set to not only substantially hike the foreign direct investment (FDI) cap in the distribution platforms ? from 49% to 74% ? but will also enforce a uniform FDI cap across various carriage platforms like DTH, IPTV, Mobile TV, HITS and cable companies. Also, 49% FDI (out of 74% proposed) will be put on automatic route, sources said.
The Department of Industrial Policy and Promotion (DIPP) has batted for a uniform FDI cap of 74% across all carriage platforms in its recommendations on FDI in broadcasting sector. According to a senior DIPP official, draft note to this effect has now been sent to the information and broadcasting ministry, department of telecommunications (DoT), and home and finance ministries for their comments and inputs. ?The aim is to bring uniformity in the sectoral caps of all the distribution platforms. Soon it will be placed before the Union Cabinet for their consideration,? the official told FE.
The move will bring cheers to the loss-making cable distribution industry as it will open the flood gates for overseas investments. Experts say around R30,000-35,000 crore will be required for the complete digitalization of the 90 million Indian cable homes. However, due to analogue cable distribution services, under declarations and fractured business practices, domestic cable firms were finding it tough to raise money from home-grown lenders.
This is also important because the current norms for the various carriage platforms differ. While FDI norms recommeded for Mobile TV, HITS and IPTV are pegged at 74%, for cable distribution companies the permissible foreign investment limit is 49% of which upto 20% can be FDI while the balance can be from foreign institutional investors, Non-resident Indians, and others. For private FM radio, the FDI limit was recently raised to 26% from 20% (enforced for almost 10 years). On its part, the Telecom Regulatory Authority of India (Trai) had recommended reducing the FDI cap for analogue cable firms from 49% to 26%, a move not supported by the nodal I&B ministry later.
The broadcasting sector is divided in two broad groups ?
carriage and content services. This was done to maintain
level playing field amongst similar services as technically it is feasible to provide broadcasting services through telecom networks as well.
