India’s TRAI Recommends Changes to Foreign Investment in the Broadcasting Sector

July 23, 2010

On June 30, 2010, the Telecom Regulatory Authority of India ("TRAI") issued recommendations proposing changes to the existing policy on foreign investment in the broadcasting sector ("Recommendations") which was required in light of the amendments to the method of calculating the level of foreign investment in Indian companies as set out in the consolidated foreign direct investment policy issued by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India ("GoI") on March 31, 2010 ("Policy"). The Recommendations are currently with the Ministry of Information and Broadcasting for its review. It is important to note that the Recommendations have been issued by TRAI in exercise of its advisory functions, and do not have the force of law for the time being.

Summary of Recommendations: 

TRAI has recommended the following changes, inter alia, to the existing foreign direct investment policy in the broadcasting sector: 

  • All foreign investment below 26% in the broadcasting sector should fall within the [automatic route[1]], and those of 26% and above should require prior approval of the GoI. 
  • Foreign investment limit for broadcast carriage services should be 74%, which would include direct to home (DTH), internet protocol television (IPTV), mobile television, head-end in the sky services (HITS) and teleport and multi-system operators who are upgrading their networks towards digitalization with addressability. 
  • Foreign investment limit in local cable operators should be reduced from 49% to 26% (subject to GoI approval).
  • Foreign investment limits in FM Radio should be increased from 20% to 26% (subject to GoI approval). 
  • Restrictions on foreign investment for uplinking and downlinking TV channels other than news and current affairs TV channels should be removed. 
  • The Policy should be modified for the broadcasting sector. 

[1]  Under the foreign direct investment laws in India, the term "automatic approval" means that prior approval of the GoI is not required for the proposed investment.

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