The Cabinet’s decision to allow 100 per cent foreign investment in advertising agencies through the automatic route will help foreign players to strengthen their hold in India.
The past few months have seen activity in this front, with WPP plc raising its stake in Hindustan Thompson Associates to 74 per cent and in the Suhel Seth promoted Equus Advertising to 45 per cent.
At the same time, Havas Advertising International is undertaking a restructuring of its business in India. Most big conglomerates already have a strong presence in the country.
Reacting to the government decision, Mr. George John, Chairman, TBWA\Anthem said, “Allowing 100% FDI in advertising will do away with the red tapism involved in getting FIPB approvals for change in equity participation. Of course with this change in policy, international agencies will not be required to go through long bureaucratic processes to enter India.”
“I don't think that any international agency will prefer to set up shop on their own in India. They will much rather buy a local agency or go the acquisition route which international ad agencies such as Grey & McCann Erickson have already done long before this policy change, ” opined George John.
According to industry sources, 100 per cent FDI allowance would help reduce operational complications. At the same time the FDI move will help Indian advertising people to enhance their skills via international workshops and the hike.
Even though this news has brought some cheer to the industry, many feel that the foreign agencies would not hurry in acquiring stakes in Indian agencies.