The government is considering a proposal to take into account only the foreign holding in the single-largest shareholder while calculating the effective foreign holding in a broadcasting company. However, the current sectoral cap of 26% would remain unchanged.
The proposal comes in the wake of the information & broadcasting (I&B) ministry seeking clarifications from the department of industrial policy & promotion (DIPP) regarding the modalities of calculating foreign direct investment (FDI) in the broadcasting sector. To make matters more complicated, sub-sectors like FM radio, news broadcasting, cable and direct-to-home broadcasting have various FDI caps.
Broadcasting & media is the only sector in which there exists the concept of ?single-largest Indian shareholder?, who must have at least 51% in a broadcast venture.
The latest proposal, suggested by the I&B ministry, is currently under review by the DIPP as part of the government?s plans to draw up a comprehensive FDI policy for the entire broadcasting sector. According sources, the I&B ministry believes this simple method would be the best way to calculate foreign holding in a broadcasting venture.
The ministry has also pointed out that several companies applying for channels are unable to provide up-to-date shareholding patterns due to the frequent changes. In addition, many listed broadcasters have expressed difficulties in gauging the extent of holdings by FIIs as well as foreign funds in the company.
The government is of the view that shares for which details were unknown should be considered foreign held and this was, therefore, an unfair practice. A number of channels, including ones from broadcasters like NDTV and TV18, are on hold due to the FDI review in the sector.
