Do you know about the Conditions for FDI in Broadcasting, Print Media & Civil Aviation?

Foreign Direct Investment is the main engine of economic growth and a source of non-debt financing for the country’s economic development. The FDI policy is continuously revised to attract larger volumes of foreign investment to the country. The government has introduced an investor-friendly FDI policy whereby FDI up to 100% under the automatic route is allowed in most sectors/activities. FDI policy provisions have been gradually liberalized across various sectors in the recent past to make India an attractive investment destination. Some of these sectors include defense, construction, trade, pharmaceuticals, energy exchanges, insurance, superannuation, other financial services, asset reconstruction companies, broadcasting, single brand retail trading, coal mining, digital media, etc.

In this article, we will be concerned about the conditions for FDI in Broadcasting, Print Media & Civil Aviation.

What is Foreign Direct Investment (FDI)?

Foreign direct investment (FDI) is an equity stake in a foreign company or project created by an investor, company, or government from another country. Generally, the term is used to describe a business decision to acquire a substantial stake in a foreign business or to buy it outright to expand operations into a new region. The term is not usually used to describe investment in shares in a foreign company itself. Foreign direct investment is a key element of international economic integration because it creates stable and long-term links between economies.

The Foreign Direct Investment Policy Regulation is frequently updated by the government with more and more liberalization. The following section lists the sectoral FDI limits in various sectors as per the Consolidated FDI Policy 2020.

Advantages of Foreign Direct Investment

FDI brings many benefits to a country. Some of them are described below.

• It brings financial resources for economic development.
• It brings new technologies, skills, knowledge, etc.
• It enhances job opportunities for people.
• It brings a more competitive business environment to the country.
• It improves the quality of products and services in industries.

Routes of FDI in India

There are three routes for FDI flows into India. They are as follows:

• 100% FDI permitted through automatic route 
• Up to 100%, FDI permitted through government route 
• Up to 100%, FDI permitted through automatic + government route

In an automatic route, the foreign entity does not require prior approval from the government or the RBI. 

As part of the government route, the foreign entity should be required to obtain the approval of the government. She should apply through the Foreign Investment Facilitation Portal which facilitates single window clearance. This request is then forwarded to the appropriate ministry or department, which approves or rejects the request in consultation with DPIIT.

Purpose of Sectoral Limits

To facilitate faster approval of most proposals, the government has also increased the FIPB approval limit from earlier Rs 3,000 crore to Rs 5,000 crore. As per the FIPB policy, it considers foreign investment proposals with inflows of up to Rs 3,000 crore, and those exceeding this limit are referred to the Cabinet Committee on Economic Affairs for consideration.

The main core of these reforms was to facilitate, rationalize, liberalize, and simplify the foreign investment process in the country and bring more and more FDI proposals on the automatic route rather than the government route where the time, money, and energy of the investor are wasted.

FDI in Broadcasting

Broadcasting has various sub-categories and the sector limits are listed below.

Infusion of fresh foreign investment above 49% into a company that does not apply for a license/permission from a line ministry, resulting in a change in ownership structure or transfer of an existing investor’s stake to a new foreign investor, will require government approval.

FDI in Print Media

Other conditions

• Foreign direct investment should be made by the owner of the original foreign newspaper whose facsimile edition is proposed to be published in India. 
• Publication of a facsimile edition of a foreign newspaper can only be done by an entity incorporated or incorporated in India under the provisions of the Companies Act, as the case may be. 
• The publication of facsimile editions of foreign newspapers would also be subject to the Guidelines for publishing newspapers and periodicals with news and current affairs and publishing facsimile editions of foreign newspapers issued by the Ministry of Information and Broadcasting on 31.3.2006, as amended from time to time.

FDI in Civil Aviation

The civil aviation sector includes airports, scheduled and non-scheduled domestic passenger airlines, helicopter/seaplane services, ground handling services, maintenance, and repair organizations, Aviation training institutes, and technical educational institutions.

Other terms

• Air transport services include domestic scheduled passenger airlines; unscheduled air transport services, and helicopter, and seaplane services. 
• Foreign airlines may participate in the share capital of companies operating cargo airline services, helicopters, and seaplanes according to the above limits and entry routes. 
• Foreign airlines can also invest in the equity of Indian scheduled and non-scheduled airlines up to 49% of their paid-up capital. Such investments are subject to some conditions:
• It would be made through government approval 
• The 49% limit would include FDI and FPI investments 
• Investments so made would have to comply with relevant SEBI regulations such as capital issue regulations and disclosure requirements (ICDR) / Regulations on Substantial Acquisitions of Shares and Takeovers (SAST) as well as other applicable rules and regulations, 
• All foreign nationals likely to be associated with Indian scheduled and non-scheduled air transport services as a result of such investment will be screened before deployment for security and 
• All technical equipment that may be imported into India as a result of such investment will require permission from the appropriate authority in the Ministry of Civil Aviation.
• In addition to the above conditions, foreign investment in M/s Air India Ltd. is subject to the following conditions:
• Foreign investment in M/s Air India Ltd. including foreign airlines shall not directly or indirectly exceed 49% except for those NRIs who are Indian nationals where foreign investment is permitted up to 100% within the automatic route. 
• Substantial ownership and effective control over M/s Air India Ltd. shall continue to be vested in Indian nationals as provided in the Aircraft Rules, 1937. 
• FDI in civil aviation shall be subject to the Aircraft Rules, 1937 provisions as amended from time to time.

Final words

Foreign investment is seen as key for India, which needs around US$1 trillion to overhaul its infrastructure sectors, such as ports, airports, and highways, to boost growth. Foreign investment will help improve the country’s balance of payments situation and strengthen the value of the rupee against other world currencies, especially the US dollar.

The government last year relaxed norms for foreign direct investment in more than a dozen sectors, including defense, civil aviation, construction and development, private security agencies, real estate, and news broadcasting.