In a further opening up of the media,
India Thursday unveiled plans to invite bids for 330 new FM radio stations
across the country while permitting overseas radio companies to invest
within the present 20 percent foreign investment cap.


"We have allowed structural flexibility in foreign investment and are now
going to allow 20 percent foreign direct investment (FDI) subject to the
existing ceiling," Information and Broadcasting Minister S. Jaipal Reddy
told reporters after the cabinet meeting chaired by Prime Minister Manmohan
Singh.

"Foreign radio companies can come in with Indian partners, subject to their
equity cap remaining 20 percent," Reddy said.

The minister clarified that private FM radio would be allowed to broadcast
only entertainment, not news. Only the state-owned All India Radio (AIR) and
its FM radio stations would continue to relay news.

"The government will not allow news to be relayed by private FM radios, only
entertainment. We have not applied our mind to permitting news on FM
radio -- we will look into it later," he said.

In the first phase of allowing private investment in FM radio in 1999, the
government had confined foreign investment only to foreign institutional
investors (FII), overseas corporate bodies (OCBs) and non-resident Indians
(NRIs).

In the second phase of expansion to generate more employment and create
opportunity for local talents, the government is planning to seek private
investment for 330 FM radio stations in 90 cities across the country through
the tendering process to begin in a month.

"As no FM radio can run only on film music, we feel they will help to create
employment and opportunity for local talent. Competition will give rise to
innovation in programmes," he said.

The minister said all the present 21 operators would be allowed to
participate in the tender process under the revenue sharing formula by
paying a one-time licence fee.

In the case of new players, it has been decided "they would pay one time
entry fee based on closed bidding process". In the case of old players, they
would have to pay the average of the successful bid amounts of new players.

To avoid further litigations, the government has decided to permit all
operators to participate in the second phase of expansion.

"We will not blacklist any company including those with ongoing litigation
or disputes in court," Reddy said adding that this was being done "without
prejudice to the position of the information and broadcasting ministry and
the operators in the court".

Among the new policy decisions for the second phase of FM radio expansion
was allowing no operator to have more than one channel in any city and
holding more than 15 percent share of the national average.

Except in the C and D category cities, the government has decided not to
allow sharing of content by FM radio stations. In the smaller cities it is
being allowed as an incentive to help reduce operation costs and raise
revenues.

According to the category of cities, a maximum of 10 FM radio stations would
be allowed in A+ cities, six-eight in A class, six in B class, four in C
class and two in D class cities.

The government has taken on board the recommendations of the Amit Mitra
committee and the Telecom Regulatory Authority of India (TRAI) that private
operators would have to pay it a fixed four percent revenue share.

The government has also proposed setting up a quasi-judicial regulatory
authority. Till the time it is brought into operation, the information and
broadcasting ministry would act as a regulator.