In a move that could spark off another political controversy, the Centre has brought a note before the cabinet seeking to allow 20 per cent foreign direct investment in private radio channels, a market hitherto protected for the domestic industry.
The media sector has till now been closely guarded, with political parties divided over the extent to which FDI should be allowed in the print and broadcast media.
The Congress-led alliance’s principal allies – the Left parties – are known to be strongly against FDI in media.
The draft cabinet note says: "Foreign investment as defined by the RBI, including FDI by overseas corporate bodies/Non-resident Indians and Persons of Indian Origin etc. portfolio investments by FIIs and external borrowings, is proposed to be permitted to the extent of 20 per cent of the paid-up equity holding of a firm which has a licence for a radio channel, subject to certain conditions."
Officials said they expected a major political storm to emanate from this proposal and, hence, had kept the FDI limit at 20 per cent, a stake share which does not carry with it much weight in forming the board of a company or in passing statutory resolutions under the Companies Act.
The low FDI level suggested in the cabinet note stems from the fear of antagonising the Left.
"Our suggested FDI level is not only small but also flexible. All foreign investment is encompassed within the 20 per cent limit. FDI could be the entire 20 per cent or could be in combination with NRI holding or portfolio investment. But all forms of foreign investment would be subject to the combined ceiling," an official said.
But this is unlikely to satisfy at least sections of the Left. CPI leader Gurudas Dasgupta said: "We will oppose any move to bring in FDI into media."
