Govt For 49% Cap on Cable TV FDI.

New Delhi: In order to encourage a speedy conversion of analgoue to digital cable services, the government is set to bat for a 49% cap on foreign direct investments for the local cable operators or LCOs. The Telecom Regulatory Authority of India (Trai) — also the broadcast sector regulator — had recommended lowering of FDI cap for LCOs, i.e. from 49% to 26% last year as part of its overall review of foreign investment levels in media.

However, the information and broadcasting (I&B) ministry has supported a 49% FDI cap for LCOs while broadly agreeing with rest of the Trai's recommendations, i.e, 74% for all non-news media entities and 26% for news entities. The I&B ministry is said to have forwarded its views to Trai following which it will be placed before the Cabinet for its approval, sources told FE.

"Since there is a difference between what Trai suggested and what the government feels, the law demands that such a move should be vetted by Trai before forwarding the same for the Cabinet's approval. Once Trai gives its views, which should be very soon, the proposal will go for Cabinet's approval," a top government source said.

In its recommendation on FDI in media last year, Trai suggested lowering of the FDI cap for LCOs. This is because Trai maintained that a bulk of the 5,000-plus LCOs in the country were distributing the cable services via the traditional analogue (copper wire) system which does not demand overseas capital compared to those who needed the capital expenditure involved in converting the analogue system into a digital, addressable cable delivery system via a set-top-box.

According to estimates, installation of a digital head-end and other infrastructure for supplying digital cable signals requires a minimum capex of R5-10 crore. Experts are keenly awaiting the government's nod to a comprehensive FDI policy for the media sector as it would determine the inflow of close to $500 million in overseas investment in the cable distribution sector alone. As reported by FE last month, addressing the foreign investment woes of the media industry in one stroke, the government has firmed up its mind to propose a simplified two-level FDI norms—one for news media and the other for non-news media firms.

Source : financialexpress.com