FM radio may get 20% FDI

Ban on airing news to continue.

The information and broadcasting ministry has decided to allow foreign direct investment (FDI) of up to 20 per cent in private FM radio companies. At present, only foreign institutional investors can invest up to 20 per cent in such companies.

The ministry will soon send a proposal to this effect to the Cabinet. However, the ban on airing news by private FM radio companies will continue.

"We have formalised the policy for private FM radio and sent it to various ministries, seeking their views, before it can be forwarded to the Cabinet," Information and Broadcasting Minister S Jaipal Reddy said here today on the sidelines of a conference organised by Assocham.

The decision to allow FDI in the sector will help the country's troubled FM radio companies to get fresh foreign equity.

The move comes at a time when some of the international radio networks, including Richard Branson's Virgin Radio, have shown interest in entering the Indian market. Virgin Radio also has an agreement with HT Media Limited to jointly explore the sector and utilise market opportunities.

Not just the ministry, Telecom Regulatory Authority of India (Trai) had also favoured allowing FDI in private FM radio.

Pointing out that while 20 per cent FDI was allowed in DTH and 49 per cent in the cable industry, Trai had said, "It is therefore necessary for the government to review the policy in a holistic manner and bring about a greater degree of consistency in the rules for various segments."

But allowing news on private FM radio stations will have to wait for some more time. Reddy said the government was not open to the idea of allowing news and current affairs on private FM radio.

"There are certain reservations, especially on cross-media ownership," he said. Besides, the ministry also plans to shift the sector from the present incremental licence fee model to a revenue-sharing model.

This was a long-standing demand of the industry which said the high licence fee made business unsustainable.

The high fee, which goes up by 15 per cent every year, had caused difficulties to most radio stations. It is estimated that FM radio companies had coughed up about Rs 300 crore in licence fees.

The private FM radio industry suffered a loss of Rs 122 crore in 2003-04

Reddy said the government had finalised a liberal policy inviting fresh bids to establish 300 FM stations in the country. At present, only 21 of the 108 frequencies put up for bidding are operational.