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Wednesday, Jun 26, 2002

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Govt allows FDI in print media

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NEW DELHI, June 25

IN a historic decision, the Union Cabinet today lifted the nearly 50-year-old ban on foreign investment in the print media.

It allowed 26 per cent Foreign Direct Investment (FDI) in news and current affairs publications and 74 per cent foreign investment in the non-news and non-current affairs journals. With this decision, the Government has revoked the 1955 Cabinet Resolution under Jawahar Lal Nehru which prohibited foreign investment in the print media.

Addressing newspersons after the Cabinet meeting, the Information and Broadcasting (I&B) Minister, Ms Sushma Swaraj, said, "It is a very careful opening up. It is a timely decision. Foreign investment is permitted in the broadcasting sector and other sectors, so why should this sector be deprived?"

The Minister, however, emphasised that adequate safeguards were being put in place. In the case of news and current affairs, several concerns regarding management and editorial control had been raised. The Government had tried to address these and taken some safeguards so that management control would not be passed on to foreign hands, she said.

It stipulated that while the foreign shareholder would hold 26 per cent, the Indian shareholding should not be dispersed. The single largest Indian investor should have a significantly higher stake than the foreign shareholder.

"If the shareholding pattern changes, prior approval from the I&B Ministry would be required. The Government will not permit post-facto information or disclosure," Ms Swaraj said.

The Government has specified that three-fourth of the board of directors would comprise Indians and all key editorial posts would be held by resident Indians.

Ms Swaraj said concerns on the security aspect had also been addressed. The credentials of the foreign investors would be thoroughly scrutinised and the Ministry of Home Affairs would have to give its clearance before any approval is given by I&B Ministry.

The decision has evoked mixed response with certain media groups welcoming the move. However, major political parties like the Left and Congress have opposed the Cabinet's decision.

FIIs can't invest in listed publications

THOUGH the Cabinet today threw open the doors for FDI in print media, foreign institutional investors (FIIs) would still not be able to invest in listed companies involved in publication of news and current affairs.

Speaking to Business Line after the Cabinet briefing, the I&B Minister, Ms Sushma Swaraj, categorically said that FIIs would not be able to invest in such companies. "FIIs are not permitted to get into news and current affairs publications," she said.

This implies that the two listed companies - Gujarat Samachar and Mid-Day Multimedia - which are in the business of news will not be able to attract portfolio investments.

However, senior I&B officials said that FIIs would be permitted to invest in non-news and non-current affairs publications where 74 per cent foreign investment is permitted.

Last year, the issue of allowing foreign portfolio investment was raked up after Mid-Day Multimedia received permission from the RBI to issue shares to FIIs through the book-building process.

The Government later clarified that foreign portfolio investments would not be permitted in sectors where foreign investment, per se, is not allowed.

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