The Hindu Business Line : FDI cap on select broadcast areas may be hiked to 74%

New Delhi, Dec. 28 The Government is all set to increase foreign direct investment (FDI) limits in select broadcasting activities to 74 per cent from the present level of below 50 per cent in order to align it with the telecom sector.

The proposal would be taken up by the Cabinet Committee on Economic Affairs sometime in early 2008, official sources said.

The move follows an in-principle decision taken jointly by the Department of Industrial Policy and Promotion, the Department of Telecommunications and the Ministry of Information and Broadcasting.

It has been decided to increase the FDI limits in companies engaged in providing broadcasting infrastructure and distinguish them from companies engaged in providing content, sources said.

According to sources, the FDI cap in direct to home (DTH), setting up up-linking hub and teleports will be increased to 74 per cent. At present, DTH has foreign investment cap of 49 per cent in which the FDI component is 20 per cent, while the other activities have a 49 per cent FDI cap.

In case of FM radio, the I&B Ministry is internally considering raising the FDI cap from the existing 20 per cent to 24 per cent as that would not make any material difference with regard to control of the Indian partner on policy matters.

The move comes in response to the technical convergence in infrastructure across telecom, broadcasting and information technology. The convergence enables a company with a telecom licence to provide broadcast services through cable TV lines on Internet protocol television (IPTV) by using copper lines.

Simultaneously, DTH services can be made available on mobile phones by using mobile towers.

DTH and setting up of up-linking hub and teleports calls for higher investments.

The decision to raise the investment limits has been mooted on the basis of higher investment required in these activities. However, FM radio broadcasting along with up-linking and down-linking of television channels have been left out since they need lower investments, sources pointed out.

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