Thursday, 22 August 2013

I&B Ministry asks TRAI and PCI to accelerate views on the proposed FDI limits

Considering the miserable economic state of the country I&B ministry is becoming impatient to increase FDI caps in the broadcast and media sector. It has asked the Telecom Regulatory Authority of India to speed up its comments on the reference made earlier regarding foreign investment limits in the broadcasting sector.
In its communication to TRAI, the Ministry has sought comments regarding the paper prepared by the Finance Ministry relating to revision in existing FDI caps in the broadcasting sector. The paper had been forwarded to TRAI seeking its recommendations under Section 11(1)(a)(ii) and (iv) of the TRAI Act, 1997, which pertains to the terms and conditions of license to a service provider and measures to facilitate competition and promote efficiency in the operation of telecommunication services to facilitate growth in such services. 

The Ministry has also requested the Press Council of India (PCI) to further its advice on the existing sectoral caps of FDI in print media under Section 13 of PCI Act 1978. The advice has been sought in view of the communication received from the Finance Ministry which aims to review policy of sectoral caps of FDI in print media. Section 13 authorises PCI to express its opinion in regard to any matter referred to it by the Central Government. 
The paper proposes to raise the existing FDI cap of 26 per cent which is through FIPB route to 49 per cent through automatic route in the news sector. In the non-news sector, the existing FDI cap is 100 per cent through FIPB route which has been proposed to be 100 per cent through automatic route without the requirement of FIPB’s approval.
In a consultation paper issued in July following the ministry’s note of the same month, TRAI had reiterated its earlier proposal for increasing the foreign direct investment for FM Radio to 49 per cent, and said the FDI for teleports, DTH, HITS, mobile and cable television networks must be raised to 100 per cent.
TRAI also conceded a long-standing demand of news and current affairs television channels by proposing that they should be permitted 49 per cent FDI.
However, TRAI had said that in the cases of both FM Radio and news channels where the existing limit is 26 per cent, the clearance would be through the Foreign Investments Promotion Board.
In the case of teleports, DTH, HITS, mobile and cable television networks where the limit was 74 per cent, TRAI said that it can be raised to 100 per cent of which 49 per cent would be automatic and the rest would be through FIPB.
No change had been proposed in the case of downlinking of TV Channels and uplinking of general entertainment (non-news) channels where the upper limit is 100 per cent through FIPB.
Stakeholders were asked to give their comments on TRAI proposals. Large media groups have landed TRAI for increasing the caps however Cable operators have not accepted the same. According to cable operators Federation of India increase in FDI caps will further give an opportunity to some large media groups to expand their monopolies in media industry. According to them, FDI will be used for forced take-overs of smaller competitors rendering many people jobless. Some of the large companies are enjoying unhooked vertical monopolies in the media sector having interests in multiple TV channels, MSO networks, DTH, Newspapers, Radio etc. 
TRAI had earlier given recommendations on the same subject in April 2008 and again on 30 June last year following ministerial references, on the basis of which changes had been carried out. The last such change was on 20 September 2012.



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