TRAI releases FDI in media consultation paper; seeks industry feedback

NEW DELHI: Even while reiterating its earlier proposal for increasing foreign direct investment (FDI) in FM Radio to 49 per cent, the Telecom Regulatory Authority of India (TRAI) in its consultation paper today said that permissible FDI in teleports, DTH, HITS, mobile and cable television networks must be raised to 100 per cent.


It took up the FDI issue in the paper following a reference by the Information and Broadcasting Ministry on 22 July. The TRAI has conceded a long-standing demand of news and current affairs television channels by recommending that they should be permitted 49 per cent FDI. Stakeholders have to respond to the paper by 12 August.


However, TRAI has said that in the cases of both FM Radio and news channels where the existing limit is 26 per cent, the clearance would be through the Foreign Investments Promotion Board.


In the case of teleports, DTH, HITS, mobile and cable television networks where the limit was 74 per cent, TRAI says that it can be raised to 100 per cent of which 49 per cent would be automatic and the rest would be through FIPB.


No change has been recommended in the case of downlinking of TV channels and uplinking of general entertainment (non-news) channels where the upper limit is 100 per cent through FIPB.


TRAI says that in its reference, the Ministry had indicated it was re-examining the current FDI policy and liberalising the limits/caps with a view to easing FDI inflow. In this context ministry has requested the Authority to examine the FDI limits of various segments in the broadcasting sector and to furnish its recommendations.


TRAI had earlier given recommendations on the same subject in April 2008 and again on 30 June last year following Ministerial references, on the basis of which changes had been carried out. The last such change was on 20 September 2012.


Currently, the FDI limit in carriage services is 74 per cent , of which 49 per cent is permissible through the automatic route. Any FDI beyond 49 per cent has to go through the FIPB route. The same FDI limits and approval route were prescribed for broadcast carriage services and telecom services on the ground that both are infrastructural services akin to each other and there is a growing convergence between the broadcasting and telecom infrastructures.


The Government is contemplating enhancement in the FDI limit for telecom services to 100 per cent with FDI up to 49 per cent through the automatic route and FDI beyond 49 per cent through FIPB. Carrying the same logic forward, and keeping in mind the fact that the ongoing digitisation of cable TV services in the country would give a big impetus to the convergence of broadcasting and telecom infrastructure, the same limits and route ought to be made applicable to carriage services in the broadcasting sector, it says.


For downlinking of TV channels, no distinction has been made between the two categories while prescribing FDI limits. This is because the ingredients of content can only be controlled at the uplinking end. Hence, 100 per cent FDI is allowed in downlinking of channels in India. However, FIPB approval is required. Further, in case of channels uplinked from a foreign land, additional conditions have been mandated for permitting downlinking in the Policy Guidelines for downlinking of Television Channels dated 11 November 2005.


While granting permissions for uplinking of channels from within the country as well as for downlinking of all channels uplinked from within the country or abroad, the MIB takes security clearance from the Home Ministry. Since content can be sensitive in nature, it is appropriate to have checks and balances at different stages namely to screen for any potential hazard from a national perspective. In view of these considerations, the status quo ought to be maintained regarding the route for approval of any FDI.


For uplinking of TV channels of the non-news and current affairs category, 100 per cent FDI is permitted through the FIPB route. The status quo may continue, TRAI says..


For uplinking of TV channels of news and current affairs category, the existing FDI limit is 26 per cent through the FIPB route. An increase in the FDI limit for news & current affairs channels will enable access to more resources for these channels at competitive rates. These resources can be applied for upgrading news gathering infrastructure and quality of presentation. It could also reduce the dependence of TV channels on advertisement revenue. Therefore, the FDI limit for news & current affairs channels in the uplinking guidelines may be increased from 26 per cent to 49 per cent through the FIPB route.


There are existing provisions in the uplinking guidelines to safeguard management and editorial control in news creation. These include: i) requirement to employ resident Indians in key positions (CEO of the applicant company, three fourth of the Directors on the Board of Directors, all key executives and editorial staff), ii) the largest Indian shareholder should hold at least 51 per cent of the total equity, iii) reporting requirements when any person who is not a resident Indian is employed/ engaged etc.


If the FDI limit in uplinking of TV channels of the news and current affairs category is enhanced to 49 per cent , then as per provision in ii) above the remaining Indian shareholding (51 per cent) would have to be with a single Indian shareholder. The more general issue, on which stakeholders may wish to make suggestions, is whether or not any changes are at all required in these conditions. In fact, a better way to ensure that content deemed undesirable or subversive in nature is not broadcast through TV channels is by having proper content monitoring and regulation through a content code, instead of using FDI limits as the tool for this purpose.


The Government has announced the Phase III of expansion of FM radio. In this phase it is envisaged that 839 new private FM radio stations will come up, expanding the coverage of private FM radio stations from 87 cities to 313 cities. The auction of frequencies for FM radio is likely to be taken up by the Government shortly. Easy availability of capital to operators through multiple sources at competitive rates would ensure better participation in the auction by the operators.


The phase III policy also expands the sphere of activities that can be taken up by the FM radio operators. These include carriage of information pertaining to sporting events, live commentaries of sporting events of a local nature, traffic and weather, cultural events and festivals, examinations, results, admissions, career counselling and employment opportunities, public announcements pertaining to civic amenities like electricity, water supply, natural calamities, health alerts as provided by the local administration etc. For building up of infrastructure for such services, additional investments will be required. Keeping in view all these aspects, the FDI limits may be enhanced from 26 per cent to 49 per cent through FIPB route for the FM radio sector.


In the past, FDI limits for FM radio have been fixed on the same lines as that for TV news channels, on the rationale that FM radio and news and current affairs channels are of a similar nature from the sensitivity point of view. Enhancing the limit to 49 per cent through the FIPB route will also ensure that the FDI policy for FM radio will remain aligned to the FDI policy for uplinking of the news and current affairs channels, which is also being considered for enhancement to 49 per cent through the FIPB route.


The Phase III policy of the Government for FM Radio also prescribes a similar condition for safeguard of managerial control of radio channels as in the guidelines for uplinking of news and current affairs channels. If the FDI limit for FM radio is enhanced to 49 per cent, then, as in the case of news and current affairs channels, the remaining Indian shareholding (51 per cent ) has to be with a single Indian shareholder.

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