| 20 Jun 2024
Steps taken to allow level-playing field in FDI for all MSOs and LCOs; rules tightened on ownership

NEW DELHI: In a major step to create a level-playing field, cable operators or multi-system operators who are not undertaking up gradation of networks towards digitalisation and addressability will also be entitled to 100 per cent foreign direct investment.

However as in other cases where it has increased the FDI to 100 per cent, entry beyond 49 per cent will be through the government route.

The investment for terrestrial FM radio continues to be 49 per cent through the automatic route, subject to such terms and conditions specified from time to time by the Information and Broadcasting Ministry (I&B Ministry) for grant of permission for setting up of FM Radio stations.

It was clarified that In the I and B sector where the spectral cap is up to 49 per cent, the company would need to be 'owned and controlled' by resident Indian citizens and Indian companies, which are owned and controlled by resident Indian citizens.

There is also a change in the policy with regard to up linking and down linking of channels. The investment will be 49 per cent through the government route with regard to uplink of news and current affairs channels but up linking of non-news and current affairs channels (GECs) will be 100 per cent through the automatic route. Down linking of TV channels is also 100 per cent through the automatic route.

These changes have come after a re-assessment of the relaxations allowed in fifteen sectors including broadcasting on 10 November.

The Department of Industrial Policy and Promotion of the Commerce Ministry said for this purpose, the equity held by the largest Indian shareholder would have to be at least 51 per cent of the total equity, 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' will include any or a combination of individual shareholders, or a relative of the shareholder within the meaning of Section 2 (77) of Companies Act 2013; and 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 group of Indian companies under the same management and ownership control.

For the purpose of this Clause, "Indian company" will 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.

This is subject to the provision that in case of a combination of all or any of the entities will have entered into a legally binding agreement to act as a single unit in managing the matters of the applicant company.