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Ambarish Mukherjee
Nithya Subramanian

Government sources said that though this was not a new concept and had been debated earlier, it was once again being discussed.

New Delhi , Aug. 14

THE controversies generated over Star Group's corporate structure of using shell companies and retaining management control despite being a minority shareholder to bypass regulations in its media operations in the country have again brought back the issue of imposing a minimum capitalisation and capital adequacy norm for all media ventures in the country with foreign participation.

Government sources said that though this was not a new concept and had been debated earlier, it was once again being discussed.

Sources said that the Ministry of Industry was examining the possibility of extending such a condition, which was already applicable in financial sectors such as insurance and non-banking finance companies, to the media sector as well.

However, sources pointed out that while the issue of minimum capitalisation was meant initially for judging the intent and capability of the foreign investor and his seriousness about Indian investment as far as the financial sector was concerned, this time around, for the media sector, it was being contemplated to judge the intent and seriousness of both the joint venture partners in media businesses.

The issue of minimum capitalisation in the media sector has cropped up after the Government received applications for Star News and Star Group's direct-to-home venture — Space Television. Media Content and Communication Services (MCCS), which has applied for uplinking permission for Star News, has a paid-up equity of just Rs 1 lakh which would be raised to Rs 4 crore while Space Television had also initially applied for a DTH licence with a similar paid-up of equity.

Sources in the Information and Broadcasting Ministry said that it had looked into the issue of low paid-up equity.

"In the case of Space TV, the company was asked to rework its application and increase its paid-up equity to Rs 10 crore," sources said.

While the Industry Ministry has not made any specific recommendation on the minimum capitalisation norms as yet for the media sector, it may be noted that for the insurance sector, the minimum capitalisation norm is Rs 100 crore while for fund-based non-banking financial activities, it is $50 million for setting up wholly-owned subsidiaries.

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