The government on Tuesday decided to enhance sectoral FDI limits in the broadcasting sector. While 100 per cent FDI has now been allowed in Direct-to-Home (DTH) and cable networks, the cap for FDI for uplinking news and current affairs channels was increased to 49 per cent from the current 26 percent. Also FDI cap was increased to 49 per cent in FM radio through government route.
Analysts believe this will make international media companies and foreign funds look at the sector in a much more positive manner. This is also likely to give a boost to the ongoing implementation of the Digital Addressable System.
In 2013, TRAI had also made similar recommendations on FDI limits. It had also said that the possibility of complete ownership is expected to attract investors who are expected to bring advanced technology in sectors like the DTH.
Jehil Thakkar, Partner and Head of Media and Entertainment practice at KPMG India said this was a much awaited step for the sector. He said international companies that might have kept away from investing in the DTH sector in the past, due to the 74 per cent cap and the mandatory partnership with an Indian company, will now be encouraged to invest in India.
DTH sector is a capital intensive sector with long gestation period and the industry has in the past been grappling with losses.
Regarding enhancing of FDI cap in current affairs and news channels, Thakkar said that several broadcast companies in the sector have been struggling for funds and this will bring the much needed investments.
The radio industry, which largely airs non-news content, has in the past also been pressing for higher FDI caps. Analysts believe the move will provide a boost to the sector as the government is in the process of expanding FM radio’s presences to new cities under Phase III.