The ceiling on foreign direct investment (FDI) should be increased from 49% to 74% in Indian direct to home, internet protocol TV and teleport ventures due to both the vast operational expenses involved and growth of the broadcast sector, according to the Indian Government.
Endorsing the recommendations of the Telecommunications Regulatory Authority of India (TRAI), the Information and Broadcasting (I&B) Ministry will raise the FDI limit for DTH satellite TV and IPTV platforms, as well as teleport outfits, in line with the existing 74% limit set for FDI in mobile TV and HITS companies.
Responding to TRAI, the I&B Ministry said it: "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. This will 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 burgeoning growth of the sector, which requires huge investment and also in view of the convergences of technologies," explained the Ministry.
However, a recommendation to reduce the FDI ceiling for local cable operators (LCOs) from 49% to 26% was rejected by the Ministry. In its response to TRAI it said: “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 ministry is of the view that not much purpose would be served by reducing the FDI limit and, therefore, 49% FDI may be retained by the LCOs.”