The Department of Industrial Policy and Promotion, the apex policy making body for foreign investment under the Ministry of Commerce and Industry, has recently revised the guidelines for calculating total foreign investment (direct and indirect) in Indian companies for uniformity in the methodology of calculation across different sectors.
As a result, the Ministry of Information and Broadcasting has requested the Telecom Regulatory Authority of India (Trai) to revisit its recommendations.
Based on the preliminary views of stakeholders, Trai today released a consultation paper on foreign investment in the broadcasting sector. Trai has invited all stakeholders to respond to the issues raised in this consultation paper by January 30 and the same will be posted on Trai’s website by February 8.
Trai had submitted its recommendations on foreign investment limit for the broadcasting sector on April 26, 2008. The regulator had recommended that the methodology used to calculate foreign investment in the telecom sector should be adopted for the broadcasting sector.
To adopt a uniform policy, Trai, in its recommendations on April 26, 2008, had said: “Foreign investment will include investment by foreign institutional investors (FIIs), non-resident Indians (NRIs), foreign currency convertible bonds (FCCBs), American Depository Receipts (ADRs), Global Depository Receipts (GDRs) and convertible preference shares held by foreign entity.
Indirect foreign investment will mean foreign investment in the company or companies holding shares of the licensee company and their holding company or companies or legal entity (such as mutual funds, trusts) on proportionate basis.
Shares of the licensee company held by Indian public sector banks and Indian public sector financial institutions will be treated as ‘Indian holding’. In any case, the ‘Indian’ shareholding will not be less than 26 per cent.
The current limits for foreign investment varies for different segments of the broadcasting sector. As of now, the FDI and FII limits in FM Radio are 20 per cent, which Trai has recommended to raise to 49 per cent. Cable network and direct-to-home companies have a limit of 49 per cent (FDI not to exceed 20 per cent). Uplinking hub and teleports, too, have a 49 per cent limit.
Trai has recommended to raise the limit in cable network, DTH, uplinking and teleports to 74 per cent. The FDI and FII limits in news and current affairs channels are 26 per cent, which Trai has recommended to go up to 49 per cent.
