New Delhi, Sept. 14: The Centre today pushed up the foreign investment limit in the broadcast sector to 74 per cent, a move expected to help the cable television industry raise money to upgrade from analogue to digital signals.
The decision was taken by the cabinet committee on economic affairs (CCEA), which approved the proposal of the department of industrial policy and promotion to raise the foreign direct investment (FDI) cap to 74 per cent in teleports, direct-to-home (DTH) services and cable networks working towards digitisation.
For cable networks not upgrading their technology, the existing 49 per cent limit would continue.
The four metros of Delhi, Mumbai, Calcutta and Chennai have to switch to digital cable signals by October 31 this year and the rest of the country by the end of 2014. Cable operators need an estimated Rs 40,000 crore for the technology upgrade.
Industry bodies, which had clamoured for the hike saying they were unable to raise such large sums of money locally, applauded the decision.
The National Broadcasters’ Association president, NDTV executive vice-chairman K.V.L. Narayan Rao, dubbed the move “fantastic news”.
The FDI limit so far was 49 per cent. It will now be 49 per cent under the automatic route and beyond 49 per cent and up to 74 per cent under the government route.
The CCEA also cleared FDI up to 74 per cent in mobile television. So far, there was no specific FDI policy for this segment. Here again, foreign investment up to 49 per cent under the automatic route and up to 74 per cent under the government route has been permitted.
The government clarified that the existing 26 per cent limit on foreign investment under the government route would continue for uplinking of news and current affairs TV channels/FM radio. For uplinking of non-news & current affairs TV channels/ downlinking of TV channels, the existing policy of 100 per cent foreign investment would continue.
“Enhanced access to foreign investment is expected to expand the reach of broadcasting services, improving accessibility of these services, and bring in international best practices,” the Centre said in a statement late this evening.
The approvals “will make the foreign investment policy for the broadcasting sector consistent with that of the telecom sector because of the convergence of technologies in these two sectors”.
The Telecom Regulatory Authority of India (Trai), which also regulates cable TV, had unveiled a set of recommendations in June 2010 where it had estimated the figure of Rs 40,000 crore needed for digitisation.
“Foreign investment can be a source to supplement the capital requirement,” the regulator had said. India has an estimated 106 million television households, of which 26 million have DTH and 80 million cable, mostly in analogue form.
Cable operators welcomed the move. “Today’s approval promises to speed up the digitisation process. While there are cross-holding restrictions, the government has created a framework for bringing in investments,” said M.G. Azhar, chief operating officer, Den Networks.
“They have aligned FDI limits in telecom and broadcast sectors which would enable cable TV providers to offer broadband services and gain incremental revenues,” Azhar added.
But some operators voiced misgivings about loss of control. They felt the 74 per cent FDI limit could see the reins of their businesses landing in the hands of the foreign investors.