I&B Ministry endorsed TRAI’s Proposal to have 74% FDI Ceiling for DTH, IPTV

The information and broadcasting ministry endorsed/okayed  the recommendation by TRAI to enhance foreign direct investment (FDI) ceiling for direct to home TV, Internet protocol TV and teleport from 49% to 74%. Telecom Regulatory Authority of India’s (TRAI) recommendation to reduce the FDI ceiling for local cable operators from 49% to 26% was however rejected by the ministry which argued that the limit had been 49% since 1995.

The Ministry declared that the nature of control as per the provisions of the Company Law would also not undergo any change since the power to initiate a special resolution remains the same at 26% or at 49%.

The recommendations on FDI cap for uplinking of non-news and current affairs TV channels and downlinking of TV channels uplinked from abroad and in news channels and FM, radiowas also endorsed by the Ministry.  There is no restriction on foreign ownership of non-news and current affairs TV channels and downlinking TV channels uplinked from foreign countries.

There is a cap of 26% on FDI flow in news and current affairs TV channels and FM radio, and Trai wanted the limit to remain untouched.

Platforms such as HITS and mobile TV are allowed to invite FDI up to 74%.  Parity is now being sought to be restored by allowing DTH, Teleport and IPTV operators also to attract the same level of foreign investment.

The ministry may broadly agree with the recommendations that a limit of 74% for foreign investment for the broadcast carriage services such as DTH, IPTV, Mobile TV, HITS and Teleport may be set. The ministry’s endorsement is likely to bring uniformity in the FDI ceiling in carriage services. The rationale brought out by TRAI for reaching the 74% limit is justified in view of the increasing growth of the sector, which requires huge investment and also in view of the convergences of technologies.