Indian government proposes to remove FDI and cross media irritants in DTH once again: is it the real thing this time?

The Indian government is believed to be considering a proposal to lift the 20 per cent foreign direct investment (FDI) cap in direct-to-home broadcasting ventures to 49 per cent. The difference this time: the voting rights will be capped at 20 per cent. 

It is also proposing to the amend the cross media restrictions in a similar manner taking the cap up to 49 per cent but limiting the voting rights to 20 per cent, a senior information and broadcasting ministry official told late last night.

The lifting of the 20 per cent FDI ceiling means that DTH ventures could be in a position to attract enough capital. The inability to generate enough capital to flag off a DTH service has been a major constraint for Indian companies as they have been loathe to wait out the long gestation period that such a project would require to start generating profits. But one has to wait and watch whether foreign investors would be willing to cede control of a venture in which they would be pouring in hundreds of millions of dollars.

The hike in the cross media restriction limit could also prove attractive and will allow integrated media companies to exploit their content properties across another platform such as DTH. The key question is whether they would be willing to give up their voting rights.

Officials in the I&B say that an opinion has been sought from the department of company affairs on the issue of amending the FDI and cross media barriers and it has opined that prima facie it seems like the proposed changes seem all right.

However, this is not the first time that smoke signals have been sent out that the DTH regulations introduced in 2000 would be made more investment friendly. On several occasions in the past the government has made similar announcements only to find that it has not been able to translate it into action. 

If the limit is removed and the norms are liberalised then it is quite likely that a risk-taking entrepreneur would take the plunge into DTH. One of the most interested players in the launching DTH in India has been global media baron Rupert Murdoch but his foray has been nipped in the bud by fearful rivals and an even more reluctant government. 

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