It was never clear why FDI limits in the media space were restricted to 26%, but that is what they have been for a long time since the biggies in the news media wanted it that way. And in much the same way of most other industries, these vested interests ensured FDI limits were kept at low levels —much the same, for instance, has just happened in the defence sector where FDI limits were kept at 49% due to opposition from large Indian defence manufacturers.
In this context, it was brave of Information and Broadcasting minister Arun Jaitley to say, at the first JS Verma memorial lecture, that such limits should be revisited. As Jaitley pointed out, with all foreign newspapers already available online, there was little point in preventing their offline presence. After all, if the owners of these newspapers want to set up commercial presence here, they should be free to do so. What is not clear, though, is whether the dominant players in the newspaper space will block the move again, or whether they are now in favour of it. The point that needs to be kept in mind, though, is that were limits to be hiked, they need to be raised all the way, and pointless restrictions be removed. Hiking the FDI cap to 49%, for instance, only creates arbitrage opportunities for entrepreneurs who will make the most of the foreign newspapers’ need for a local partner and essentially get a premium for lending their names. Ditto for the current restrictions on the editors having to be Indian citizens. When chief executives of other businesses can be foreigners, why can’t editors also be foreigners? Also, how can India expect its citizens to become editors of global media firms without a quid pro quo?
It is in keeping with this new reality of well-funded and globally competitive newspapers that Jaitley made his other suggestion, to scrap the ceiling on how much advertising a newspaper or television channel can have. If the media’s consumers, the readers and viewers, he argued, are willing to tolerate this, why should there be a regulation on this? In the same vein, perhaps the information and broadcasting minister would like to spend time looking at the other Trai guideline on how all television content has to be made available to all carriage companies and at a government-mandated rate. In a competitive market, firms need to be able to charge differential rates for their content.