On September 14, 2012 the government announced a new FDI policy for the broadcasting sector. Under the policy, FDI up to 74% has been allowed in broadcasting infrastructure services. Previously the maximum level of FDI permitted in most infrastructure services in the sector was 49% through automatic route. There could be three reasons for the increase in FDI in the sector. First, the broadcasting sector is moving towards an addressable (digital) network. As per Telecom Regulatory Authority of India (TRAI), this upgradation could cost Rs 40,000 crore. Second, the increase in FDI was mandated because a higher FDI was allowed for telecommunication services, which too are utilised for broadcast purposes. In telecommunications 74% FDI is allowed under the approval route. Third, within the broadcasting sector, there was disparity in FDI allowed on the basis of the mode of delivery. These issues were referred to by TRAI in detail in its recommendations of 2008 and 2010. Recent history of FDI in broadcasting services In 2008 and 2010 TRAI had recommended an increase in the level of FDI permitted. A comparison of recommendations and the new policy is provided below. 
As noted in the table, FDI in services that relate to establishing infrastructure, like setting up transmission hubs and providing services to the customers, is now at 49% under automatic route and 74% with government approval. FDI in media houses, on the other hand, have a different level of FDI permitted. TRAI’s recommendations on the two aspects of FDI in broadcasting Digitisation of cable television network: The Cable Televisions Networks Act, 1995 was amended in 2011 to require cable television networks to be digitised. By October 31, 2012 all cable subscriptions in Delhi, Mumbai, Chennai and Kolkata are required to be digitised. The time frame for digitisation for the entire country is December 31, 2014. However, this requires investment to establish infrastructure. As per the TRAI 2010 report, there are a large number of multi-system operators (who receive broadcasting signals and transmit them further to the cable operator or on their own). As per the regulator, this has led to increased fragmentation of the industry, sub-optimal funding and poor services. Smaller cable operators do not have the resources to provide set-top boxes and enjoy economies of scale. As per news reports, the announcement of higher FDI permission would enable the TV distribution industry to meet the October 31 deadline for mandatory digitisation in the four metros. Diversity in television services: FDI in transmitting signals from India to a satellite hub for further transmission (up-linking services) has not been changed. This varies on the basis of the nature of the channel. For non-news channels, FDI up to 100% with government approval was allowed even under the previous policy. However, the FDI limit for news channels is 26% with government approval. In 2008 TRAI had recommended that this be increased to 49%. However, it reviewed its position in 2010. It argued that since FM and up-linking of news channels had the ability to influence the public, the existing FDI level of 26% was acceptable. It also relied upon the level of FDI permitted in the press, stating that parity had to be maintained between the two modes of broadcast. Under the new policy the level of FDI permitted in these sectors has not been changed.
Recently, there have been instances of certain collective investment schemes (CISs) attempting to circumvent regulatory oversight. In addition, some market participants have not complied with Securities and Exchange Board of India's (SEBI) orders of payment of penalty and refund to investors. In August, the Securities Laws (Amendment) Bill, 2013 was introduced in the Lok Sabha to amend the Securities and Exchange Board of India Act, 1992 (the SEBI Act, 1992), the Securities Contract (Regulation) Act, 1956 (SCRA, 1956) and the Depositories Act, 1996. The Bill replaced the Securities Laws (Amendments) Ordinance, 2013. The Bill makes the following key amendments: a) Definition of Collective Investment Schemes The SEBI Act, 1992 defines CISs as schemes in which the funds of investors are pooled, yield profits or income and are managed on behalf of investors. It also exempts certain types of investments which are regulated by other authorities. The Bill introduces a proviso to the definition of CIS. This proviso deems any scheme or arrangement to be a CIS if it meets all three of the following conditions: (a) funds are pooled, (b) it is not registered with SEBI, or it is not exempted by SEBI Act, 1992, and (c) it has a corpus of Rs 100 crore or more. These provisions could potentially lead to some schemes not conventionally defined as CIS to fall under the definition. For instance, partnership firms operating in the investment business or real estate developers accepting customer advances could be termed as CISs. SEBI has been given the power to specify conditions under which any scheme or arrangement can be defined as a CIS. This raises the question of whether this is excessive delegation of legislative powers - usually the parent act defines the entities to be regulated and the details are entrusted to the regulator. b) Disgorgement (repayment) of unfair gains/ averted losses SEBI has in the past issued orders directing market participants to refund i) profits made or ii) losses averted, through unfair actions. The Bill deems SEBI to have always had the power to direct a market participant to disgorge unfair gains made/losses averted, without approaching a court. This power to order disgorgement without approaching a court is in contrast with the provisions of the recently passed Companies Bill, 2011 and the draft Indian Financial Code (IFC) which require an order from a court/tribunal for disgorgement of unfair gains. Further, the Bill specifies that the disgorged amount shall be credited to the Investor Education and Protection Fund (IEPF), and shall be used in accordance with SEBI regulations. The Bill does not explicitly provide the first right on the disgorged funds to those who suffered wrongful losses due to the unfair actions, unlike the draft IFC. c) Investigation and prosecution The Bill empowers the SEBI chairman to authorise search and seizure operations on a suspect’s premises. This does away with the current requirement of permission from a Judicial Magistrate. This provision removes the usual safeguards regarding search and seizure as seen in the Code of Criminal Procedure, 1973, the recently passed Companies Bill, 2011 and the draft Indian Financial Code. The Bill also empowers an authorised SEBI officer to, without approaching a court, attach a person’s bank accounts and property and even arrest and detain the person in prison for non-compliance of a disgorgement order or penalty order. Most regulators and authorities, with the exception of the Department of Income Tax, do not have powers to such an extent. d) Other Provisions of the Bill The Bill retrospectively validates consent guidelines issued by SEBI in 2007 under which SEBI can settle non-criminal cases through consent orders, i.e., parties can make out-of-court settlements through payment of fine/compensation. The United States Securities and Exchange Commission settles over 90% of non-criminal cases by consent orders. The Bill retrospectively validates the exchange of information between SEBI and foreign securities regulators through MoUs. The Bill sets up special courts to try cases relating to offences under the SEBI Act, 1992. For a PRS summary of the Bill, here.
