Plan to raise FDI limit for media may have been put on hold3 min read . Updated: 16 Jul 2013, 01:26 AM IST
I&B ministry refers matter to Telecom Regulatory Authority of India, Press Council for comments
New Delhi: The government’s proposal to raise the foreign direct investment (FDI) limit for media companies appears to have been put on the backburner, with the information and broadcasting (I&B) ministry seeking recommendations on the matter from the Telecom Regulatory Authority of India (Trai).
The ministry has also referred the proposal to the Press Council of India (PCI). Trai regulates both the telecom and the broadcasting sectors.
On Monday, the ministry said it had communicated to the department of industrial policy and promotion (DIPP) that since the process of raising the FDI limit for media companies will take time, existing caps and entry route rules for the print and broadcasting sectors should stay.
“Status quo in the interim (should) be maintained as prescribed in the consolidated FDI Policy 2013," the ministry said in a statement.
The ministry had first sought the views of stakeholders in the media industry on the draft consultation paper of the ministry of finance on FDI limits in print and television companies. Since different media owners held diverse views on the subject, the matter remained inconclusive.
While the Indian Newspaper Society sought additional time to give its comments, the News Broadcasters Association, a representative body of major news channels, did not respond. With no clear view on the issue, the ministry referred the matter to Trai and PCI for their comments.
A draft paper on the FDI policy in different sectors including media—print, broadcasting, radio and direct-to-home (DTH)—was drawn up by a panel led by Arvind Mayaram, secretary in the department of economic affairs in the ministry of finance. It recommended increasing the FDI cap in newspapers, radio and television news channels to 49% under the automatic route from the current 26%. For DTH, it recommended raising the cap to 100% from 74%.
Trai chairman Rahul Khullar confirmed receiving the communication from the ministry. “The ministry has asked us to give our recommendations on FDI in media," he said, declining to make any further comment.
This is not the first time that the matter on the FDI limit has been referred to Trai. The regulatory body first gave its views on FDI limits to the government in 2008. The matter was referred to the authority again after DIPP modified the methodology of assessment of foreign investment in companies.
On 30 June 2010, in its revised recommendations to the information ministry on FDI limits for broadcasting, Trai maintained the status quo for news and current affairs television channels at 26%. However, it proposed an increase in private FDI cap for private FM radio from 20% to 26% that was eventually accepted by the government.
Several media companies said they were unhappy with the decision to delay liberalizing FDI limits. A top executive at a broadcasting company said the move was regressive.
“It is a short-sighted view of the government. Higher FDI caps would have brought in economic benefits for all. It is very limiting. The industry may have been divided, but since when has the government based its decisions on the industry view?" the executive said, not wanting to be named.
Abhijit Pawar, managing director and editor at the Sakal Media Group, said newspapers that have monopolies may be opposed to the move. “It may be the big boys of the industry. FDI in newspaper is not just about money. It is about technology and knowledge transfer."
Clarifying his stand on the FDI issue, I&B minister Manish Tewari said the media sector should not assume liberalizing FDI further has been scrapped. “We have used the word ‘interim’ in our communication. It is definitely not being ruled out. What we need is a broader consultation." He said there were several reasons why the ministry decided to refer the matter to Trai.
For a start, the FDI limits increased last time were also on the basis of recommendations made by Trai.
“The regulatory authority had recommended 74% in carriage services (DTH) and 26% in FM radio. (Only) after security provisions were added by the government to those recommendations and Trai concurred were the proposals finally accepted. We did not want to be criticized for not asking Trai when that was the process followed last time," Tewari said.
He said the industry view on higher FDI caps was divided. While regional language television channels as well as newspapers were opposed to higher limits, the Indian Newspaper Society sought more time to give its views. “There were only individual views and no industry views. Besides, a lots of questions were raised on the FDI limit—why 49% has been proposed for news, why not 51%, the need for 100% in carriage services, among others. There was just no clarity on these issues," Tewari said.