New Delhi: In a broad sweep, the government opened up India’s broadcasting sector on Tuesday, increasing the foreign direct investment (FDI) limit in television news channels and private FM radio, and permitting 100% overseas ownership of digital cable and direct-to-home (DTH) services.

In a review of the foreign direct investment (FDI) policy for 15 sectors, the government raised the FDI limit in news channels and FM radio to 49%, up from the existing cap of 26%.

Foreign investment limit in DTH, digital cable networks and so-called Headend in the Sky services (HITS)—a satellite based system to deliver TV channels to cable operators—was raised to 100% from 74% to allow foreign strategic investors to look at Indian companies favourably.

To be sure, only up to 49% FDI has been allowed in the cable, DTH and HITS services through the automatic route. For 100% FDI, companies will need to seek approval from the foreign investment promotion board (FIPB).

Similarly, companies would require government approval for 49% FDI in news channels. But 100% foreign investment in non-news channels—or entertainment broadcasters—will be allowed through the automatic route.

There is no change in the foreign ownership norms for print media, in which FDI remains capped at 26%.

A government statement said these measures are meant to ease, rationalize and simplify the process of foreign investment and to allow more FDI proposals through the automatic route rather than having to go through the FIPB, which consumes the time and energy of investors.

Vikram Chandra, chief executive at the news broadcaster New Delhi Television Ltd, welcomed the increase in the sectoral cap in news channels.

“The news business is suffering owing to several external issues. There are distribution problems with no signs of decline in carriage fees. Even though digitization has kicked in, subscription revenue has not,” said Chandra.

He added that although a higher FDI cap would have been welcome, even 49% opens up possibilities for Indian news companies.

“There is a flickering hope now,” he said.

Another broadcasting sector executive, who declined to be named, said the move may grab headlines but doesn’t do much for companies looking to invest in Indian news channels.

“Unless we see what the fine print says, it is difficult to exult about the FDI hike to 49%. If the 51% holding continues to be with one single Indian entity and there are other restrictions on editorial positions, it will remain a completely illiquid investment,” he said.

The radio sector cheered the announcement. A top executive at a leading private FM radio company, who also spoke on condition of anonymity, said the relaxation in FDI norms for radio will help bring in global expertise, innovation and better programming.

“It’s terrific that the government has increased the FDI (limit) to 49%. It will come handy for radio broadcasters who have spent Rs.3,000 crore in the last couple of months on renewal of licences and the Phase 3 auctions,” said Prashant Panday, chief executive, Entertainment Network (India) Ltd (ENIL) that operates the Radio Mirchi FM stations.

“The radio sector has turned the corner and has been generating interest from an investments standpoint. International partners looking for expansion will now look to set foot in India,” Panday added.

The FDI limit in private FM radio broadcasting was earlier capped at 26% subject to approval by the FIPB.

DTH and cable industry executives welcomed the announcement that 100% FDI would be allowed in distribution and carriage services.

“This will open up a lot of avenues for strategic investors from developed countries… While opening up of FDI is great, it must be noted that no Indian DTH operator has reached the current 74% FDI limit so far,” said Salil Kapoor, chief operating officer of Dish TV India Ltd. “I think systemic flaws like licence fee and multiple taxation also need to be looked into.”

“Foreign investments will help in digitizing the 70 million homes that have to be digitized in phase 3 and phase 4 (of the digitization process),” said Ashok Mansukhani, wholetime director at Hinduja Ventures Ltd.

It will also allow companies like Comcast Corp. and Time Warner Inc. to set up base in India, he added.

The Hinduja group operates both a digital cable network and a HITS platform. Mansukhani added that with more foreign media now being allowed into the country, there will be a need for an electronic media regulator.

ENIL is a unit of Bennett, Coleman and Co. Ltd, which publishes The Times of India and The Economic Times. HT Media publications Mint and Hindustan Times and its radio station Fever 104 compete with BCCL newspapers and radio stations in some markets.

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