FIIs allowed up to 26% in print media

This would give the print media greater flexibility while raising money.

The government today allowed foreign funds, overseas corporate bodies, non-resident Indians and persons of Indian origin to invest in Indian newspaper companies. Besides, the printing of foreign editions of international publications in India has also been allowed.

However, the overall foreign investment cap in news and current affairs publications will remain at 26 per cent. Decisions to this effect were taken by the Cabinet today.

The decision to permit portfolio investments in newspaper companies is expected to give them greater flexibility while raising money.

Companies like The Indian Express Newspapers (Bombay) Ltd and The Hindustan Times Ltd, which have planned IPOs, are expected to benefit from this.

Besides, listed companies like Deccan Chronicle Holdings are of the view that allowing foreign funds to invest in media companies will result in them getting better valuations.

The Cabinet move marks a change in the government's 2002 decision, which banned foreign funds from investing in Indian newspaper companies.

The government's decision to allow printing of foreign editions of international publications in India comes with certain riders and overrules the Cabinet resolution of 1955, which did not favour the printing of foreign publications in India.

As per the norms proposed, the Indian editions will have to be brought out by an Indian-registered entity.

In addition, foreign publications can also set up fully owned companies in India for this purpose, provided such a company is incorporated and registered in India under the Companies Act. Besides, the company will also have to comply with Indian laws.

The publication brought out in India will also have to have the prior approval of the country of origin and the edition brought out in India should not be specifically designed for the Indian market.

No India-specific news and advertisement just for the Indian market can be printed in the local edition. Also, the newspaper will also have to have the prior approval of the Indian information and broadcasting ministry.

The government's move was prompted by the printing of International Herald Tribune (IHT) in India by the Hyderabad-based Midram Publication after registering the foreign paper in India as a local newspaper.

The Cabinet decision thus legitimises the printing of IHT in India. It is also worth noting that publications like the Wall Street Journal and BusinessWeek among others have drawn up plans to print locally.

"India gives right to information. International publications are available on Internet and people can buy them at a higher cost a day later. With this move, the same paper will be available in India on the same day at lower cost. The government's policies are not based on individual cases," said S Jaipal Reddy, information and broadcasting minister.

Reddy clarified that the IHT will not attract any penalty. "The earlier guidelines did not have a legal backing. This move gives it," he said. Reddy also said the government will move amendments to the Press Registration and Books Act in the coming session of Parliament.

Besides, the government, as part of initiatives to strengthen Indian newspapers, also decided to raise the level of syndicated content in local publications from the present level of 7.5 per cent to 20 per cent.