New Delhi: The government may be readying to relax foreign investment rules in newspapers and television news channels from the current 26% to 49% in a move that, if it goes through, will be welcomed by foreign media firms seeking an entry into one of the fastest growing economies in the world, and decried by some domestic media firms.
Two people familiar with the matter confirmed that the government was going ahead with this move, although they differed on the contours of the change.
A senior bureaucrat said the proposal was ready and that the government would announce the change—spanning print and broadcast—next month.
A second person, who generally keeps abreast of developments in North Block, where the ministries of finance and home are located, said a cabinet note on increasing foreign direct investment (FDI) levels in news channels is ready and that he has seen it.
This person added that a decision would be announced after a cabinet meeting that will be held shortly.
Neither person wanted to be identified given the sensitivity of the issue. The government’s decision—if it happens—will also likely generate a political storm.
Talking to Mint after a cabinet meeting on Thursday, information and broadcasting minister Ambika Soni had said that although some media firms were pushing for increased FDI, there was no consensus among the media firms. Responding to a question on the proposal to increase the limit to 49% in news, she said that the government was discussing the various sectoral caps in media recommended by the Telecom Regulatory Authority of India. “No decision has been taken on these yet,” she added.
Soni has, in recent weeks, hinted at a coming change in foreign investment rules in media—first at the Indian Magazine Congress on 5 November and then at the World Economic Forum’s India Economic Summit on 9 November.
A third person, the chief executive of a broadcast firm, said that he was aware of a proposal to increase the foreign investment level in news channels that the government was considering before this year’s general election.
The government had decided to defer its consideration of the proposal till after the elections, given that the issue could have hurt its prospects in the elections. This person, who too did not want to be identified, said he had not heard of the government’s new move.
Rajesh Jain, head of audit and consulting firm KPMG’s media practice, said: “If the 26% cap is indeed being pushed to 49%, it will have a positive impact on the foreign interest in the news broadcasting sector. Also, it would open up the opportunity beyond 26% for private equity investors as well. This will be a good thing for the companies, which need to raise money.”
However, he added that a lot would depend on the fine print of the guidelines such as editorial control.
Vivek Gupta, partner at boutique consultancy BMR Advisors, echoed Jain’s view on capital requirements: “The Indian consumer is highly value-driven and does not pay up easily for media products. So the companies need to make huge investments to reach scale.”
The government first allowed 26% FDI in news and current affairs in print media in 2002. The ceiling for non-news newspapers and magazines was fixed at 74% and the policy had several caveats. In the case of news and current affairs newspapers and magazines, the guidelines said the shareholding could not be dispersed and a significant stake was to be held by a single Indian promoter.
The policy also required key posts in the editorial board, including the chief editor’s, to be occupied by Indians.
Last year, the government changed some of the rules for magazines and allowed foreign news and business magazines to launch Indian editions. However, the FDI level in ventures launching such editions was not raised and only Indian companies registered under the Indian Companies Act were allowed to launch them.
The 2002 decision to allow 26% foreign investment reversed the 1955 cabinet resolution against foreign participation in news media.