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Wednesday, Feb 20, 2002

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PMO okays 26 pc FDI in periodicals -- Dailies spared; 100% in advt proposed

Ambarish Mukherjee
Nithya Subramanian

NEW DELHI, Feb. 19

THE Government is set to seek the Cabinet's approval for a proposal to permit 26 per cent foreign direct investment (FDI) in the print media for periodicals including weeklies, fortnightlies and monthlies. If approved, this would end a moratorium imposed 47 years ago on FDI in print media by a 1955 Cabinet Resolution.

However, the restriction on FDI is likely to remain for dailies in the print media, which will continue to get the protection it has been enjoying so far.

Highly placed political sources told Business Line that early this week, the Prime Minister's Office (PMO) gave an `in principle' clearance for foreign direct investment with minority holding for periodicals.

The Ministry of Information and Broadcasting (I&B) has been asked to prepare a detailed note on the subject which will be placed before the Cabinet Committee on Economic Affairs (CCEA) for a final decision, sources here said. Simultaneously, the Government is also planning to allow 100 per cent FDI in the advertising sector, the sources said. The FDI cap in this sector now is 74 per cent, under the Reserve Bank of India's (RBI) automatic route.

The proposed FDI policy will spell out guidelines for foreign institutional investors, minimum capitalisation norms, editorial control, management control and voting rights of the minority shareholders. Sources also pointed out that there are likely to be two separate set of guidelines for English and vernacular publications.

But the major difference between the earlier proposal and the latest one is that this time FDI is being permitted in all journals while earlier it was restricted to scientific and technical journals only.

The Government has been open to the idea of opening up the print media since October last year; the I&B Ministry had put up a Cabinet note seeking approval for allowing certain technical and scientific journals to be published in India.

The I&B Ministry was of the opinion that there had been a major shift in the media since the 1955 Cabinet Resolution, which barred foreign investment in the print media. The Ministry has been of the view that there is no point in preventing FDI in the sector since foreign newspapers and journals are already available through the Internet.

Last year, Mid-Day Multimedia's initial public offer ran into rough weather on the issue of FII investment. Although the RBI had given a clearance for the company to offer shares to FIIs, a controversy was raked up over granting approval for the company, as foreign investment is not permitted in print media under a 1955 Cabinet resolution.

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