The N K Singh committee's recommendations to raise the foreign equity cap in Ku-band direct-to-home (DTH) broadcasting to 49 per cent from 20 per cent, if accepted, would see companies showing more interest in the sector, said companies and analysts.
Information and broadcasting ministry officials said the ministry was studying the specific recommendations and it was too early to comment.
The 20 per cent FDI cap has been a major factor, preventing companies from venturing into the sector. Companies, like Rupert Murdoch's Star TV, which plans to start a DTH service, have been demanding relaxation in the FDI limit.
"DTH companies compete with terrestrial TV transmission and is a competitive service with high capital cost and risks. Given the current 20 per cent foreign equity limit, foreign companies have little or no interest in entering the sector," says the report.
"The existing FDI limit makes it difficult for companies to enter the field. If the recommendations are accepted, it will be a good news for the sector," a senior Star executive told Business Standard.
Satellite broadcasting companies have been lobbying for relaxation in FDI norms for the DTH sector, which is capital-intensive. A typical DTH platform launch costs between Rs 1,500 crore and Rs 2,000 crore.
"Considering the high investment, it is necessary to have a higher FDI cap to generate interest among media players. We think, the sector will become more attractive now," he said.
The committee's suggestion for a more liberal view on FDI in news and current affairs programmes is being seen as an encouraging move. Pointing out that editorial control for news and current affairs programmes must vest with Indian nationals, the report says the business managers and those who control the commercial decision can, however, be foreigners.
It has also suggested that the cap on foreign investment should be based on the company's market share.
"Over time a more liberal policy that focuses on controlling dominance in terms of share of the market for news and current affairs is desirable.
"Thus, FDI equity limits in terms of individual companies could eventually be replaced by limits to the aggregate market share (25 per cent to 49 per cent) that can accrue to foreign-controlled news and current affairs companies taken together," it says.
