Home ministry not in favour of I&B FDI plan

The Union home ministry has opposed the information and broadcasting ministry's proposal to hike foreign direct investment (FDI) to a uniform 74% for all distribution platforms like Direct-to-Home (DTH), cable companies and operators. “The ministry of home affairs has opposed the FDI proposal over security issues. MHA is insistent on security clearances and details of all foreign investors. Among other things, it may also lead to inordinate delays. It may be discouraging for investors keen on India,” confirmed an official source. 

In February, the I&B ministry had circulated a draft bill among ministries in which the MHA had raised security concerns. After incorporating the recommended changes, the reworked draft also has failed to satisfy the MHA requirements,” the source added. 

Only after a consensus among ministries does a FDI draft go to the Department of Industrial Policy and Promotion (DIPP) and then to the Union cabinet for approval. 

An approval of the proposal will result in availability of much higher FDI for Direct-to-Home players (DTH), cable operators, cable companies and multi-system operators (MSOs). 

At present, there are different caps for FDI across distribution platforms with 49% being the cap for DTH and cable companies and operators. 

The rationale behind the I&B ministry’s move was to encourage fund flow into the sector especially in the backdrop of the ongoing digitalisation effort which would require huge investment. 

The I&B ministry had said: “The 74% limit is justified in the view of the burgeoning growth of the sector which requires huge investment and also in view of the convergences of technologies.” India is aiming at complete digitalisation by December 31, 2014, which would entail a switch-over from the prevalent analog system to a digital one.

Source: http://cablequest.org/news/government-news/item/1591-home-ministry-not-in-favour-of-i-b-fdi-plan.htmlSource: http://cablequest.org/news/government-news/item/1591-home-ministry-not-in-favour-of-i-b-fdi-plan.html