The Hindu Business Line : TRAI for hiking FDI cap on FM radio biz

New Delhi, Feb. 22 The FM radio business in India could see a substantial inflow of foreign direct investment with the Telecom Regulatory Authority of India (TRAI) recommending on Friday that the FDI cap in private FM radio broadcasting be enhanced to 49 per cent. Currently, the cap is at 20 per cent in the entertainment segment.

The regulator has also suggested that FM broadcasters be permitted to air news using content from AIR, Doordarshan, authorised television news channels, PTI, UNI and any other authorised news agencies.

In case FM stations choose to air news, the FDI cap would be 26 per cent, TRAI has said in its proposals. “The FDI cap will also include funds received from Foreign Institutional Investors (FIIs),” the regulator said in its recommendations on the third phase of private FM radio broadcasting.

According to Information and Broadcasting Ministry data, during January to November 2007, 103 FM channels were commissioned, bringing the number of functioning FM channels to 150. The process is on for the allotment of another 97 private FM radio stations in the second phase.

Investment draw

According to industry sources, only two to three FM radio companies currently have FDI presence, but analysts feel that a higher FDI limit will pull in more investments.

TRAI has also recommended lowering of the annual fee by 50 per cent in the case of existing private FM radio broadcasters in the North East and Jammu and Kashmir region for an initial period of three years.

In order to encourage diversified content development, there should be no restriction on the outsourcing of content production as well as leasing of content development equipment, the regulator said.

It also said that for private FM radio bidding in future, the geographical basis should be changed from district to city. “However, necessary flexibility has been provided for retaining the existing area of operations. The channels available in a district should be auctioned to eligible bidders and be allocated to successful bidders in descending order of the bid price,” TRAI said.

The regulator has also recommended that at least three channels, excluding AIR, in any district, be given to three different entities. “The existing ceiling of 15 per cent of total FM radio channels in the country permitted to a holder is no longer valid,” it said.

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