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Govt plans riders to FDI in print

Bipin Chandran in New Delhi

As part of the move to allow foreign direct investment in newspapers, the government is studying a proposal to limit the investment by a foreign firm in only one newspaper company.

The government may also not allow foreign investment in more than one company of a newspaper group.

To safeguard the Indian promoters' interests, the government plans to ensure that the largest Indian shareholder has a significantly higher holding than the foreign investor.

Thus, the government is unlikely to allow more than one foreign firm to invest in an Indian newspaper company.

Besides, the government is also planning to amend the Foreign Exchange Manag-ement Act (Fema), 1999, to allow foreign investment in the print media.

According to the proposals, the changes in Fema will provide for permissible classes of capital transactions, the limits of admissibility of foreign exchange for such transactions and the prohibition, restriction or regulation of certain capital account transactions under Section 6 of Fema.

The amendments will also specify the period and the manner of repatriation of foreign exchange under Section 8 of Fema.

According to an official, Section 9 of Fema will also be amended to specify the class of persons or limit up to which the foreign currency account may be held or operated.

It will further be amended to specify the limit up to which foreign exchange acquired may be exempted under the Clause (d).

The government has set up an inter-ministerial group to finalise the guidelines, which are likely to be announced in a month.

The government on June 25 allowed 26 per cent foreign direct investment in newspapers and periodicals and 74 per cent in the non-news print media.

The relaxation in case of news and current affairs print companies, however, comes with riders to ensure that the editorial and management control stays in Indian hands.

The government did not allow foreign institutional investors, non-resident Indians and overseas corporate bodies to invest in news and current affairs print companies.

Thus, in the event of an initial public offering foreign institutional investors and overseas corporate bodies would not be allowed to participate in the IPO process.

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