Govt proposes hiking FDI limit in FM radio

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The government has proposed hiking the foreign direct investment (FDI) limit in FM radio from the current 20% to 26%. CNBC-TV18's Ekta Batra reports.

As part of its Phase III plans for the development of the radio industry, the government intends to hike the FDI limit in FM radio to 26%. Listed companies like ENIL and Mid-Day, which have radio companies in their bouquet of offerings would gain from the development and the stocks were bouquet on the stock exchanges on Friday reflecting the news.

Hiking FDI is a part of larger regulatory change that is expected to be brought in the FM space, which could be expected as soon as this winter session of the Parliament.

Other changes that are expected to come through include multiple frequencies in the same city and allowing multi-city networking, which means one could play the same radio station in Mumbai and in Delhi.

Move a game-changer: Radio Mirchi

"It symbolizes the fact that the radio sector is opening up all over again," said Prashant Pandey, CEO of ENIL, which owns Radio Mirchi. "We have weathered the economic downturn over the last 12 months. As we get out of that, it is a good step that the policy announcement is likely to be made maybe in the next couple of months."

Pandey said phase III of changes may also include other 'exciting' regulatory changes apart from hiking of the FDI limit.

"It's a game-changer. It does a lot of good things for the industry. I hope the policy will also address some of the cost concerns which is what is the reason for the overall industry being in trouble in the last few years," he said.

To watch the complete CNBC-TV18 analysis, please watch the attached video.