Government rules out FDI in FM sector

NEW DELHI: The move will disappoint private players, but the government has formally ruled out any possibility of foreign investment in the private FM radio sector.

"No," was the cryptic reply from information and broadcasting minister Jaipal Reddy to a question posed by, today, on whether the government would allow foreign direct investment in the sector.

One of the suggestions of the sector regulator, based on feedback from the stakeholders, was that the government could review the foreign investment norms for the FM radio sector.

At the moment, foreign investors are barred from this segment, while foreign financial institutions can invest in FM radio ventures as per Reserve bank of India guidelines pertaining to the sector.

The I&B ministry has also sent back its views on a set of suggestions on FM radio expansion to the Telecom Regulatory Authority of India (Trai), saying "certain points need to be discussed further."

It is interesting to note that officially the government has not taken a view on Trai's recommendations for either the FM radio sector or those pertaining to TV broadcast, DTH, conditional access, etc.

Speaking to on the sidelines of the Economic Editors' conference here today, Reddy added that some other recommendations of the broadcast and cable regulator relating to FM radio are being discussed with Trai.

Asked whether the government would accept a Trai suggestion on migration of private FM radio players from a licence regime to revenue sharing, Reddy said, "All I can say at this moment is that it's under consideration."

According to Reddy, the ministry would try to get cabinet clearance on various issues relating to FM radio broadcasting in a couple of weeks.

"The second phase of expansion of FM radio is in a fairly advanced stage and we are likely to seek Cabinet approval (on some issues) in the next two weeks," Reddy said.

In this connection, the ministry would also speak to a merchant banker to help it out with financial issues relating to the sector.

Pointing out that the merchant banker would be finalised over the "next few days," Reddy said, "We want to avoid the financial pitfalls (faced by the earlier government) and the merchant banker would be able to guide us properly."

The minister earlier had observed that despite the radio revolution being started by the previous government, certain policy decisions had impeded the growth of FM radio as well as community radio services.

With a view to kickstart the community radio services, which have failed to take off because of prohibitive policy guidelines, Reddy said the government is looking at "re-framing the guidelines" for such radio services.

"We are talking to other ministries like home and telecommunication, but we feel that the community radio guidelines need to rationalised as, at present, they are too restrictive," Reddy explained.

The government is of the opinion that if the right type of investment climate is created, there is scope yet for about 400 and 4,000 private FM and community radio stations, respectively in the country.

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