In a major move to give Indian FM companies more autonomy, the Union Cabinet has finally approved much awaited ownership norms for private FM radio. The in- principle Cabinet approval, given on Sep 11, 2008, will help India to kick off radio reforms, said a market analyst. Core theme of the approved norm is providing greater fiscal flexibility to the existing players.

Explaining necessity of the new policy, I&B Minister Mr. Priyaranjan Dasmunsi said, “no company with or without foreign investment is allowed to change ownership through transfer of shares of the majority stakeholders to any entity without the permission of the government during the first five years of the channel’s operation”.

However, the present approval will enable the companies to apply for a change in ownership even within the five years period. “The I&B ministry has been authorised to grant permission to FM broadcasting companies for creation of subsidiaries, mergers or demergers or amalgamation of companies by way of transfer of shares”, Mr. Dasmunsi added. The new clause, of course, requires that at least 51 per cent stake to be maintained by the promoters/majority shareholders. In case, the new entity involves with FDI, then that must be kept within permissible limit. Formation of new entity will be governed by the Companies Act 1956 and the new entity will sign fresh agreement with the government specifying changed terms and conditions.

The new Cabinet approval has not, of course, said anything positive on releasing of additional frequencies that the radio operators are demanding since long to ease their operation across markets. If government allows broadcasters to operate with multiple frequencies in a city, then that would allow them to work with several radio channels in the same city simultaneously. Besides, FICCI, on behalf of the radio operators, has also raised the issue of automatic license renewal with the government.