Top Story

Home >> Advertising >> Article

Proposed scrapping of Press Note 1: No huge difference to Indian ad industry feel experts

22-October-2008
Font Size   16
Proposed scrapping of Press Note 1: No huge difference to Indian ad industry feel experts

The Government’s proposed move to scrap the regulation known as Press Note 1 of 2005, has met with mixed reactions from the Indian advertising industry. The move would ease the flow of foreign direct investments (FDI) into the country and assumes significance in the light of quite a few mergers and acquisitions taking place recently in the Indian advertising industry – BBDO, Tribal DDB and Omnicom, among others.

Press Note 1 protects the interests of Indian companies by putting a brake on foreign companies changing local partners to suit their business interests. It prohibits any foreign company from exiting a joint venture in India and setting up its own company in the same line of business without the Indian partner’s consent. The foreign companies would require ‘No Objection Certificates’ (NoCs) from their Indian partners before starting any venture in India.

The Government’s proposal, when it comes into effect, would make the mandatory the NoCs from joint venture partners redundant for new investments. The Government is keen to go ahead with this proposal since there are various sub-sectors within the broad categorisation of advertisement industry, where there is no clash of interests in several cases.

However, most of the advertising fraternity feels that the move will not make much of a difference to the India advertising industry.

Sam Balsara, Chairman & Managing Director, Madison World, opined, “I do not think it will have a major impact on advertising agency entrepreneurs, because most large agencies are fully controlled by foreign networks. Also, foreign investors tend to take a pre-clearance letter at the time of entering into an agreement with the Indian agency.”

Nakul Chopra, CEO - South Asia, Publicis, said, “I am not sure whether this will make any huge difference to the advertising industry.” According to him, most of the top 20 agencies were now wholly or majority-owned, hence, the elimination would help ease the paperwork and be relevant where a dispute arose between the Indian and foreign partners. In a sense, it was ‘protection’ for the Indian partner, he said, adding, “This protection is equally available through our courts. I don’t believe this would make a huge difference.”

Arvind Sharma, Chairman, Leo Burnett felt that in the short run, “elimination of Press Note 1 will make a difference to the Indian entrepreneurs/ companies that have JVs with international players. The burden of providing a no-objection certificate will no longer rest with the international players. In cases where their contracts with local players bar them from entering into other JVs, the burden of proving this in the courts of law will now fall on the Indian players”.

Sharma believed that from a global perspective, however, restrictions like the one via Press Note 1 were more of an aberration. “They were not expected to last forever,” he added.

Though the advent of global players opens up competition and leads to a healthier growth and better quality, it should not be at the expense of Indian players. Taking this point of view, Suman Srivastava, CEO, Euro RSCG, noted that the elimination of Press Note 1 was healthy for the industry. He explained, “I expect something similar to happen in media as well. New media brands often create an eco-system for a new category of advertisers. Magazines for the rich are growing at the same time as luxury brands are growing. Similarly, I expect whole new categories to emerge, which have their own set of readers and advertisers.”

As for the Indian entrepreneur, would this elimination mean any kind of a setback? Srivastava said that most Indian entrepreneurs operated in a ‘Jugaadu’ way. “We Indians find our ways to compete. I don’t think foreign brands will do well merely because they are foreign brands. That was the mindset of a lot of brands in the first wave of liberalisation and many brands had to rue that mindset,” he added.

In the same context, Sharma stated, “I don’t believe that Indian entrepreneurs have planned their futures on the basis of Press Note 1. JVs and partnerships are rooted in complementary strengths that the two sides bring to the party. So, as long as the Indian players have their strengths, they will come up strategies to monetise them.”

While Balsara is of the opinion that even if one Indian entrepreneur is negatively impacted, it seems unfair. “I don’t see why only agencies should be singled out for this exception on Press Note 1,” he said.

Tags

Varun Raina, Marketing Manager, Airbnb India speaks to exchange4media about the successful #LiveThere campaign and how Bollywood helps them connect with its young consumer

Tim Castree is all praises for his team in India and trusts it to be a result of “an excellent execution of agency’s global strategy” headed by Kartik Sharma

Siddharth Dabhade says Criteo’s technology allows brands to engage with shoppers, create relevant experience on retail apps, thereby driving sales and profits

Shantanu Gangane says OTT platform Viu plans around 20+ originals and is all set to enter the Tamil market with a mix of syndicated and original content

right
left
OFF THE CUFF HAS JOURNALIST ARUN SHOURIE IN CONVERSATION WITH SHEKHAR GUPTA IN MUMBAI IAA HOSTS FIRST INDIAA REGIONAL AWARDS (TELUGU) IN HYDERABAD BREAK THE CEILING TOUCH THE SKY 2018 SEES OVERWHELMING INDUSTRY PARTICIPATION 10TH EDITION OF ABC EUREKA AWARDS IN MUMBAI CELEBRATES WORK OF PARTNER AGENCIES EMINENT JURY PICKS LOUDEST’S 100 MOST POWERFUL INDIAN MUSIC BUSINESS LEADERS MODE LOFT BY SABGROUP LAUNCHES SIGNATURE MENSWEAR POWER DRESSING CLOTHING LINE TOP MARKETERS DISCUSS ART AND SCIENCE OF EFFECTIVE LISTENING @PITCH CMO SUMMIT 2018, DELHI THIRD SEASON OF ‘INDIA’S TOP DIGITAL PLANNERS’ RECOGNIZES EXCELLENCE IN THE DIGITAL INDUSTRY WOMEN ECONOMIC FORUM 2018 SEES DISTINGUISHED GLOBAL PERSONALITIES IN ATTENDANCE PEPPER CREATIVE AWARDS 2018 RECOGNIZE THE BEST IN ADVERTISING IN SOUTH INDIA RADIO CITY’S POWER OF RADIO MEET HOSTS TOP ADVERTISING INDUSTRY LEADERS TOP INDUSTRY PERSONALITIES ATTEND ZOOM-MYNTRA EVENING TO CELEBRATE THEIR PARTNERSHIP LEADING MARKETERS, EXPERTS SHARE INSIGHTS ON DIGITAL TRANSFORMATION @ADOBE SYMPOSIUM IN MUMBAI NICKELODEON TRADE PARTY SEES MARKETING INDUSTRY LEADERS AND THEIR FAMILIES IN ATTENDANCE GOLDEN MIKES RADIO ADVERTISING AWARDS 2018 RECOGNIZE INDUSTRY’S MOST DESERVING ACHIEVERS AIMA MANAGING INDIA AWARDS HONOUR THE BEST IN THE INDUSTRY BW BUSINESSWORLD’S GREAT INDIA DEBATE BRINGS TOGETHER INTELLECTUALS ACROSS INDUSTRY SECTORS BW BUSINESSWORLD SMART CITIES CONCLAVE PATNA 2018 SEES EMINENT INDUSTRY LEADERS IN ATTENDANCE EMINENT JURY PICKS WINNERS OF GOLDEN MIKES RADIO ADVERTISING AWARDS MADDYS 2018 SEE TOP ADVERTISING AND MARKETING INDUSTRY LEADERS IN ATTENDANCE

Abraham Thomas, CEO of Radio City, and L V Krishnan, CEO, TAM Media Research, talk to exchange4media about a recent Nielsen report on radio

The announcement was made by the third judge of the Madras High Court, with an order expected later this evening.

Sanjay Goyal talks to exchange4media about the fast changing norms at companies, the current employment scenario and what would a workplace be like by 2025.