Indian Broadcasting sector is a sunrise sector for the economy making high growth strides. Indian media industry is on the cusp of a strong phase of growth, backed by rising consumer demand and improving advertising revenues. The Foreign Direct Investment (FDI) inflows in the Information and Broadcasting sector (including Print Media) in the period April 2000 – March 2016 stood at US$ 4.98 billion, as per data released by Department of Industrial Policy and Promotion (DIPP).
The government has been steadily liberalising FDI framework for this sector to move towards a digital addressable system because the higher FDI permission would mean higher investments for ensuring digitalization.
Press Note 5 of 2016 has significantly opened up the sector for FDI and now up to 100% FDI is allowed in Teleports (setting up of uplinking HUBs/ Teleports), DTH, Cable Networks (Multi System Operators (MSOs) undertaking upgradation of networks towards digitalization and addressability), Mobile TV, Headend-in the Sky (HITS) and in Cable Networks comprising of other MSO's not undertaking upgradation of networks towards digitalization and addressability and Local Cable Operators.
FDI up to 49% by way of Government route is permitted in the Broadcasting Content Services in case of Terrestrial Broadcasting FM (FM radio) and in Up-linking of 'News and Current affairs' TV channels.
FDI up to 100% under automatic route is permitted in Up-linking of 'Non-News and Current Affairs' TV channels.
Foreign Investment Promotion Board (FIPB) approval however, is required in situations where the license already exists in the Company and it is going approval would however, be required in situations where the license already exists in the Company and it is going for either foreign investment resulting in change in the ownership pattern, or where there is transfer of stake by existing investor to a new foreign investor.
Some likely advantages of the FDI policy change
(i) employment generation in the broadcasting sector;
(ii) boosting forex reserves;
(iii) wider choice for Indian consumers in Carriage and Content Services.
Additionally, FDI policy liberalisation will incentivise for cable networks who have been bearing the brunt of the costs of digitization as pushed by the government in the last few years. Also, fully liberalizing the broadcasting sector has opened up a lot of avenues for strategic investors from developed countries to invest in Indian economy. Due to the major reforms in the policy, the revenue from advertising is expected to grow at a CAGR of 13% and expected to exceed Rs. 81,600 crore (US$ 12.09 billion) in 2019 from Rs 41,400 crore (US$ 6.17 billion) in 2015.
This could also result in expanding opportunities for educational and cultural development. The increased FDI limit is also likely to provide financial support to the news industry (particularly broadcast news). Therefore, it may be a win -win situation both for foreign investors and the Indian economy.
Research inputs by my colleague, Priya Nagpal.
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