FM radio policy liberalized

Author: | Published: 1 Aug 2005
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Mulla & Mulla & Craigie Blunt & Caroe

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The government of India has launched Phase II of providing FM radio services for 336 broadcasting stations across 90 cities. To encourage private FM industry, the government of India has permitted players to migrate from the current licence fee structure to a 4% revenue-sharing regime. New participants would pay a one-time entry fee through a closed bidding process.

The existing participants of Phase I who exercise their option to be considered for Phase II, including those licensees who are eligible for automatic migration for channels already in operation, would be eligible for migration by paying one-time entry fee equal to the average of all successful bids under Phase II in that city.

Under Phase II:

  • foreign direct investment by non-resident Indians and persons of Indian origin, and portfolio investments by foreign institutional investors, are permitted to the extent of 20% of the paid up equity in the FM company;
  • more than 50% of paid up equity, excluding equity held by banks and lenders, must be held by Indian individuals or Indian corporates;
  • the majority shareholders must be vested with management control over the FM company;
  • only Indian residents can be directors; and
  • all executive personnel of the FM company must be Indian residents.

A major shareholder can only transfer shares, changing the ownership of the company, with the consent of the Ministry of Information and Broadcasting. Permission cannot be requested for at least five years from the date of operation.

The present ban on broadcast of news and current affairs programmes continues.

Shardul Thacker