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Govt clears 100% FDI in DTH sector; licenses to be issued for 20 years

The Union Cabinet has approved changes in the information & broadcasting (I&B) guidelines to bring them in sync with the existing Foreign Direct Investment (FDI) policy that allows 100 per cent FDI in the direct-to-home (DTH) broadcasting services sector.

Moreover, DTH licences will now be issued for 20 years with renewal every 10 years and licence fee will be similar to that in the telecom sector, said Union I&B Minister Prakash Javadekar. Addressing the media after the  the Cabinet meeting on Wednesday, Javadekar said licence fee has been revised from 10 per cent of GR (gross revenue) to 8 per cent of AGR (adjusted gross revenue), the release said. AGR will be calculated by deduction of GST from GR. License fee will be collected on a quarterly basis against the current annual basis.

The Commerce & Industry Ministry had provided for 100 per cent FDI in DTH, Javadekar said. “But, till now, because of I&B guidelines, FDI was restricted to 49 per cent in the sector. After today’s decision, 100 per cent FDI can flow into the sector,” Javadekar said.

The cap of 49 per cent FDl in the existing DTH guidelines will be aligned with the extant Government (DPIIT’s) policy on FDl as amended from time to time, according to an official release.

The decision (to change the I&B guidelines) was taken after discussions with TRAI (Telecom Regulatory Authority of India) on removing existing anomalies and will bring about a level playing field, the Minister added.

“The proposed reduction is intended to align the licence fee regime applicable to the telecom sector and will be prospectively applied. The difference may also enable DTH service providers to invest for more coverage leading to increased operations and higher growth and thereby enhanced and regular payment of license fee by them,” the release said.

‘Will provide certainty’

Harit Nagpal, MD & CEO, Tata Sky, said the long standing impasse on the DTH licence policy will now be resolved,  providing certainty to the sector. “We look forward to a level playing field via parity of Licence Fee with Cable TV which too is licensed by MIB and follows the same prices and margins as regulated by TRAI’s NTO,” he added.

Jehil Thakkar, Partner, Deloitte India, said longer duration licences and reduction in licence fee was a long-standing demand of the DTH sector. “The hiking of FDI to 100 per cent will also enable players to monetise their assets and encourage foreign investments in the sector,” he added. He added that allowing sharing of infrastructure will also enable more efficient use of resource.

DTH operators will also be allowed to operate platform channels to a maximum of 5 per cent of their total channel carrying capacity and a one-time non-refundable registration fee of 10,000 per channel shall be charged from an operator, as per the new guidelines.

Meanwhile, experts  pointed out that DTH operators had been pushing for a level playing field with the cable industry that does not  have to pay any licence fee currently. The industry players said  imposition of licence fee only on DTH operators was unjust and the sector should be treated on the same footing as the MSOs and HIITS platforms. The Hindu BusinessLine

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