Indian broadcasting companies working with a foreign partner will now have to take prior approval from the Foreign Investment Promotion Board (FIPB) for undertaking any new activity in the sector, even if it does not involve fresh foreign investment. The Finance Ministry has asked the Information and Broadcasting Ministry not to grant licenses to such companies without prior approval from the FIPB.
The Finance Ministry also wants the I&B Ministry to allow companies already having foreign investment to carry out additional activities only after FIPB’s specific permission. This would apply in all areas where FDI is on FIPB route. The Finance Ministry’s initiative is on behalf of the Department of Economic Affairs since the Secretary of the Directorate of Economic Affairs heads FIPB.
The move follows I&B’s approval to ASC Enterprises for providing direct-to-home services, and Hathway Cable & Datacom Pvt. Ltd to operate as a multi-system operator without the FIPB’s prior permission.
The move is aimed at keeping a tab on the foreign investment flowing into the sector as it has certain sensitivities involved. The Finance Ministry’s contention on the issue is that any operator having FDI should get clearance from the FIPB for undertaking any new activity, and that the I&B Ministry should not grant licence to operate in cases where clearance has not been provided.
According to the FDI policy, foreign investment of upto 49 per cent is allowed in both DTH and cable network services under the FIPB route, and it includes both FDI and FII investment. In the case of DTH, the FDI component cannot exceed 20 per cent. Also, the sectoral guidelines issued by the I&B Ministry have to be complied with.
Hathway, which had foreign investment of upto 26 per cent under automatic route, had approached the FIPB to bring in additional FDI. The I&B Ministry had allowed the company to operate as a MSO in Mumbai, Chennai and Delhi in September 2006.