The Union Cabinet has raised the foreign investment limit in Frequency Modulation(FM) radio channels and has approved phase 3 of FM radio expansion in India according to Information & Broadcasting Minister Ambika Soni.
The approval will allow the addition of as many as 839 new radio channels across 227 towns and an estimated Rs.1,733 crore could be raised from the e-auctions in this phase according to The Economic Times.
The Indian FM radio industry was valued at Rs.1,200 crore in 2010 and it is witnessing a growth of over 20 per cent which is expected to accelerate further to 30 per cent with Phase III.
The Cabinet also approved that the foreign direct investment (FDI) in FM radio channels can be increased to 26 per cent from the current 20 per cent.
The E-auction of FM licences in the new phase could benefit companies like ENIL (Times Group), HT Media, Jagran, Bhaskar, Mid Day, DB Corp and Sun Network.
Prashant Panday, chief executive officer of ENIL (the company that owns Radio Mirchi) said "The third phase of expansion will make FM a pan-India medium as it would take radio to small towns. For six years, there has been no expansion. This policy is important for future growth"
Currently radio's share in total advertising is 5 per cent; this is expected to increase to over 7 and 9 per cent after Phase III and IV according to industry estimates.