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DIPP notifies FDI hike in TV news, FM radio and broadcast carriage services
MUMBAI: Almost two weeks after easing foreign direct investment (FDI) norms, the Department of Industrial Policy and Promotion (DIPP) has notified the revised FDI guidelines for 15 sectors, including Information and Broadcasting.
The DIPP has clarified that in sectors like TV news and FM radio, which have 49 per cent FDI limit, the company needs to be ‘owned and controlled’ by resident Indian citizens and Indian companies that are owned and controlled by resident Indian citizens.
For foreign investors, the requirement of keeping control in the hands of Indian promoters will thus continue to be a sore point.
According to the regulatory norms, the equity held by the largest Indian shareholder would have to be at least 51 per cent (excluding the equity held by public sector banks and public financial institutions, as defined in Section 4A of the Companies Act, 1956 or Section 2 (72) of the Companies Act, 2013, as the case may be).
The term ‘largest Indian shareholder’, used in this clause, will include any or a combination of the following:
In the case of an individual shareholder, A) The individual shareholder, B) A relative of the shareholder within the meaning of Section 2 (77) of Companies Act, 2013, and C) A company/group of companies in which the individual shareholder/HUF to which he belongs has management and controlling interest.
In the case of an Indian company, A) The Indian company, B) A group of Indian companies under the same management and ownership control.
For the purpose of this clause, “Indian company” shall be a company which must have a resident Indian or a relative as defined under Section 2 (77) of Companies Act, 2013/ HUF, either singly or in combination holding at least 51 per cent of the shares.
Provided that, in case of a combination of all or any of the entities mentioned in Sub-Clauses (I) and (II) of clause 4.1.3(v)(d)(A) above, each of the parties shall have entered into a legally binding agreement to act as a single unit in managing the matters of the applicant company.
Incidentally, the Narendra Modi-led BJP government has increased FDI limit in the sensitive TV news broadcasting to 49 per cent, from 26 per cent.
The FDI limit in teleports and broadcast carriage services like direct-to-home (DTH), cable TV, IPTV, mobile TV and headend-in-the-sky (HITS) has also been increased to 100 per cent, from 74 per cent. Up to 49 per cent is under the automatic route.
FM radio sector has also been opened up. Foreign investors have the option of owning 49 per cent equity, up from 26 per cent earlier.
The government has increased the FDI cap on satellites (establishment and operation, subject to sectoral guidelines of Department of Space/ISRO) to 100 per cent from 74 per cent through government route.
The limit of 26 per cent FDI on print news media has been left untouched.
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