The government today further liberalised the foreign direct investment regime by allowing FDI up to 100 per cent on the automatic route in the advertising sector and removing the restrictive pre-conditions applicable in the film industry. As per the previous rules, FDI was permitted up to 74 per cent in the advertising sector through the automatic route.
FDI up to 100 per cent in the film sector, which is already on the automatic route, will not be subject to conditions as laid under previous guidelines. In the previous regime, companies proposing to bring in FDI in the industry, was required to have an established track record in films, TV, music, finance and insurance. If the company was the single largest equity shareholder, then it was required to ensure a minimum paid up capital of $10 million. In other cases, the minimum paid up capital was fixed at $5 million.
If the foreign collaborator was the single largest equity shareholder, it was required to make a minimum foreign equity investment of $2.5 million. In all other cases, the minimum FDI limit was $1 million. The previous norms also insisted that debt-equity ratio could not be more than 1;1, which means domestic borrowings could not exceed equity. Provisions of dividend balancing also applied.
A government source said that these conditions have been removed, and the policy change is being made in keeping with the announcement made to this effect by finance minister Yashwant Sinha in his budget speech.
