FDI cap on broadcast services raised to 74%
At present, 49% FDI is allowed in cable TV and DTH
BS Reporter / New Delhi Sep 14, 2012, 19:46 IST
The cabinet today provided the industry with an engine to fund the digitisation drive in the country by raising the foreign direct investment (FDI) limit in broadcast services to 74% across the board.
The Department of Industrial Policy and Promotion (DIPP) had proposed that FDI limit in the broadcast carriage services providers, including Direct-to-Home (DTH), Head-end in the Sky (HITS) and cable TV must be uniform. At present, 49% FDI is allowed in cable TV and DTH, while it is 74% in HITS.
Minister for Commerce & Industry Anand Sharma while announcing the revised FDI norms said: “Keeping in view the convergence between the telecom and broadcast sectors, FDI cap has been made uniform across broadcast services. For mobile TV, where there were no norms, 74% FDI would now be permitted.”
The move was strongly supported by the industry. Uday Shankar, CEO of Star TV India and the president of the Indian Broadcasting Federation, said: "It is a transformational move as the government has now provided the resource engine to make digitisation a reality. To digitise over 110 million homes the industry would require $20 billion, this cannot come from only domestic resources and there is money available from foreign investors,"
However, some operators say that the cross-holding restrictions which does not permit any broadcast company or a group of broadcast companies to pick up more than 20% stake in broadcast service providers in India may deter investments especially in areas like DTH. A top DTH operator who did not want to come on record said: "Due to cross holding restrictions the move will not help some of the big foreign players who are looking at increasing their presence. We will only know once the fine print has been made whether the government has tweaked these limitations".
Multi-system operators (MSOs), however, sounded optimistic. “The approval today would certainly speed up the process of digitisation. While there are cross-holding restrictions, the government has created a framework for bringing in investments. They have aligned FDI limits in telecom and broadcast sectors which would now enable cable TV providers to offer broadband services and gain incremental revenues”,said M G Azhar, chief operating officer, Den Networks.
The Ministry of Information & Broadcasting has set a sunset date of Dec 2014 for digitisation analogue cable households across the country. The investments required for completing the digitisation process is estimated to be in the tune of Rs 24,000 crore which includes induction of hardware as well as consolidation costs in the industry. According to industry estimates, there are around 135 million C&S households in the country, of these 35 million households have DTH services, 90 mn analogue cable and 7-8 mn HH have digital cable tv services.
However, for TV news channels, FM radio and content providers, the FDI limit will stay at 26%. The Telecom Regulatory Authority (TRAI) of India had in June 2010 proposed to raise the FDI limit in some broadcast carriage services, such as direct-to-home satellite distribution and Internet television, to 74% from 49%.http://www.business-standard.com/india/n.../186915/on