Asia Times: India/Pakistan


	June 29, 2002	atimes.com

India/Pakistan

India's print media: Liberalize and be damned
By Sultan Shahin

NEW DELHI - In the two-year battle between the fear of the Indian elite of foreign domination of the print media and the love of foreign money, the cash greed seems to have prevailed, but the fear persists.

By allowing 26 percent foreign direct investment (FDI) in news and current-affairs publications, but insisting that editorial control remain in Indian hands, India is attempting to have its cake and eat it too; but, as Disinvestment Minister Arun Shourie pointed out in a cabinet meeting on Tuesday, nothing short of allowing 100 percent FDI would induce the foreigners to invest in India's print media.

The doctrinaire communists and the less greedy among Hindu fundamentalists, too, opposed the decision. But the greatest surprise was the main opposition Congress party, the original liberalizer of the economy in the early 1990s, which chose to oppose the move. So did an assortment of smaller parties, some of whom support the coalition government headed by the Hindu fundamentalist Bharatiya Janata Party (BJP).

The cabinet approved FDI in the print media on the grounds that it did not violate the spirit of the 1955 resolution prohibiting it as safeguards would ensure that management control would rest in Indian hands. It also felt that since the electronic media - which have a far greater impact than the print media - already had that freedom, it would be futile not to allow the print the same leeway.

Most gratifying to the pro-changers, however, was the amount and quality of support in the cabinet, where even the hardened fundamentalists with an obscurantist world view supported the move. In fact, for all the controversy that it generated and the decades that it took, the decision-making proved very simple, quite swift and near-unanimous. The only exception was Finance Minister Yashwant Sinha, who said the situation was not very conducive and expressed surprise at the degree of support for the move.

Surprisingly, two senior ministers were reported to have countered Sinha - Human Resource Development Minister Murli Manohar Joshi and Shourie - who wanted to know why the foreign-equity participation should be restricted to 26 percent, and not be 100 percent.

The whoops of delight on the part of cash-starved smaller newspapers and accusations of sellout from the press barons who did not want more competition that greeted the cabinet decision, however, may in the end prove completely unnecessary.

Print-media analysts agreed with Shourie. They said it could be a while before any foreign business house clinches a deal. "Any foreign investor would like to evaluate the market dynamics first and implications of the decision before they plan to invest. I doubt there will be a rush of deals soon," said Mumbai-based Khandwala Securities analyst Nilay Dani.

This view was also reflected in the way the key Sensex market indicator behaved. Media shares retraced some of their gains after soaring on Tuesday when the announcement was first made. "Most stocks fell on profit-booking as none of the companies announced any plans to induce foreign partners as was widely expected," a dealer told the press. "Also, the market realized it will be a while before actual investments start flowing in."

Foreigners can now take up to a 26 percent stake in news publications and up to 74 percent in non-news media, but the management and editorial control must stay in Indian hands. Media analysts expect investment to flow first into the English-language media, giving them access to better technology and management, and later into vernacular publications.

Karvy Stockbroking analyst Amol Dhariya said the newspaper and magazine market had massive potential in the country of more than 1 billion people where total annual advertising revenue was estimated at Rs40 billion (US$819 million). "I don't see investments flowing in immediately, but there's huge foreign interest in the English-language newspapers and magazines," said Dhariya. "There might be some acquisitions in the vernacular media sector, but it will take some time."

Shares in publishing and broadcasting group Mid-day Multimedia Ltd, which shed 2.56 percent to Rs30.45 after vaulting the maximum permissible 20 percent on Tuesday, said it had no immediate plans to bring in a foreign partner. "We're not talking to anyone, though down the road options are open," said Somesh Kapai, head of business development at the company, which publishes the popular Mumbai tabloid Mid Day. "I don't think foreigners will come rushing to invest."

The one newspaper that might attract foreign equity soon is the New Delhi-based financial daily Business Standard, which said it hoped British media firm Pearson Plc, the publisher of the Financial Times, with which it has had a long association, now would take a stake in the paper. "We hope our existing relationship with the Financial Times will be strengthened now to an equity investment," said the editor and publisher of the Business Standard, T N Ninan.

Some international media groups such as Dow Jones are taking a wait-and-see stance. Dow Jones had sought government approval for a wholly owned Indian unit earlier. "We have no immediate plans. Now the government has taken this decision we'll have to look and see what happens," said the chief representative in India of Dow Jones and Co, Suman Dubey.

Foreign investors may balk at the restrictions imposed on the FDI at the moment and the general atmosphere of xenophobia that the fierce debate of the past year has revealed. But what might attract them nevertheless is the vast potential of the Indian news media. The country has among the most thriving media and communication industries in Asia.

There are 6,830 English and 39,825 vernacular newspapers published in India. For those who love television, there are 22 terrestrial and more than 100 satellite channels, with eight devoted to news. With 70 million television households, out of which 35 million are cable and satellite, India can boast the third-largest television market in the world; with a cumulative circulation exceeding 120 million, its print industry ranks fifth globally; and while regulatory constraints have choked its telecommunications industry, consulting outfit Gartner expects that the number of cellular-phone subscribers in India to soar to 30.9 million in 2005. Indians have also the option to log on and surf the Internet for the latest news or get the day's headlines on their mobile.

Writing on "The great media explosion" in India, information-technology expert Shailesh Dobhal said in the news magazine Business Today, "Today, the private sector is present in both telecommunications and broadcasting. A bouquet of private satellite channels has segmented the market in terms of viewership and advertising. A rise in literacy levels has spurred a resurgence in the vernacular print media, India's two largest newspapers and the television channels with the largest following in the country are vernacular ones. Satellite television reflects the aspirational changes in the Indian middle class, sometimes even influences them. And even as the debate to allow foreign investment in print media continues - it is in every other medium - Indian media houses are discovering that there is a middle path: one that balances the profit motive with the need for objectivity."

The government has obviously tried to pursue such a middle path. It couldn't have been easy for the government to depart from the cabinet resolution of 1955 that has governed the country's print-media policy to date and open the sector to foreign participation. This was the third time in less than a year that Information and Broadcasting (I&B) Minister Sushma Swaraj had sought cabinet approval for a change in the print-media policy vis-a-vis specialty and technical publications and the first time that it had put up the more contentious proposal of FDI in news and current-affairs publications.

To ensure that management control does not pass into foreign hands, the new policy mandates that Indian shareholding should not be dispersed. Under the new regime, the single largest Indian shareholder should have a significant holding higher than 26 percent. Also, the shareholding pattern cannot be changed without the permission of the I&B and three-quarters of the board of directors must be Indians.

As for editorial control, Swaraj said it would remain in Indian hands as the new policy stipulated that three-quarters of the key editorial designations should be held by resident Indians. However, the ministry has not drawn up any exhaustive list of designations that should be held by resident Indians, as the nomenclature can vary or be changed.

As the Home Ministry had told the standing committee on information technology - which had rejected limited foreign investment in news and current-affairs publications while giving a conditional nod to foreign participation in specialty/technical publications - that the "present internal-security scenario of the country is not conducive to relaxations in the existing policy", Swaraj said this concern had also been addressed.

The credentials of foreign investors, she said, would be verified on a case-by-case basis by the Home Ministry and other departments concerned. This is in keeping with the position taken by the Home Ministry in its written communication to the standing committee, where it had said that "in case the administrative ministry proposes to relax the existing policy, necessary safeguards will have to be put in place in consultation with the ministries of home affairs, external affairs and defense against the possible misuse of the print media for purposes prejudicial to the security of the state, public order, communal harmony, relations with other countries, etc".

Even in the case of specialty and technical publications - where either Indian editions of foreign publications can be brought out or foreign investment of up to 74 percent can be made - clearances will be given by the Foreign Investment Promotion Bureau on "specific recommendation" by the I&B.

"Welcome back East India Company!" That, in effect, is the spirit and import of the criticism of the cabinet's decision to open up newspapers and other print media to foreigners, a reference to the powerful European trading company that dominated India for centuries after the first arrival of its ships on Indian shores in 1608.

Apart from opposing the cabinet decision as a matter of principle, the Congress also questioned the undue haste with which the print media had been opened up without a wider debate on security and other issues. Describing it as a "unilateral decision", the party spokesman, Anand Sharma, said there was no consensus on the issue and the government had no mandate to make such a major policy shift. Again maintaining that a formal statement would be made on Wednesday, Communist Party of India (Marxist) or CPI (M), politburo member S Ramachandran Pillai said the move would allow multinationals to stifle public opinion and thereby weaken the democratic polity of the country. "It can also swallow large sections of the print media."

The CPI condemned the decision and said it would result in "views and news which are not in tune with our national interests finding space in our print media". Further, according to the CPI, "those who are selling away national assets and interests in economic and political fields ... are now following it up by handing over our national dignity and identity even in respect of the media". Finding no consolation in the "safeguards", the party, in turn, said that they only indicate and underline the dangers inherent in this move.

While the Janata Dal (secular) opposed the move and described it as yet another step of the BJP-led national government towards "political slavery", the decision had the media baron-cum-BJP member of parliament and vociferous advocate of FDI in the print media in the parliamentary standing committee on information technology, Narendra Mohan, rushing to the Information and Broadcasting Ministry to thank the minister.

The decision, he said, would strengthen the Indian newspaper industry and allow newspapers access to the best of technology that to date had been limited to some publications. Dismissing the concerns expressed in some quarters, he questioned a protective media policy when even defense production had been opened up for foreign investment.

Condemning the move, the Indian Newspaper Society (INS) said the argument that FDI in the print media would allow Indian publications access to finance did not bear scrutiny as recent years had witnessed a "remarkable expansion of the English and vernacular press". Stating that the print-media policy in existence since 1955 had stood the test of time, the INS advocated its continuation in the interests of the nation and the freedom of the press.

The Confederation of Indian Industry (CII), however, described it as a "bold and significant step" that would introduce an element of competition and provide a way for publishers to improve the quality of their publications. About the safeguards, the CII is of the view that they were "well crafted" and in conformity with the cabinet resolution of 1955.

Two factors have been mainly responsible for the easy acceptance of the proposal and the surprising demand of 100 percent foreign equity being allowed coming even from fundamentalists who have been vociferous in their opposition to liberalization. These factors also explain why the Congress party that fathered Indian liberalization voiced its opposition, though it goes against its own general policies.

One, the experience of fully opening up the electronic media. A 24-hour news channel, Zee TV, owned by a non-resident Indian (NRI), repeated throughout the day on Thursday that the US and other Western governments had withdrawn their travel advisories against visiting the country. This is a blatant lie, as the countries have only reduced the severity of the advisories and not withdrawn them, though they are expected to. Such lies could not even be propagated through official channels. Zee owner Subhash Chandra is a card-holding member of the Rashtriya Swayamsewak Sangh (RSS - the mother organization of the BJP and the fountainhead of Hindu fundamentalism). His channel could prove useful, even when the RSS and BJP were not in power and did not have access to the official media.

Even the Rupert Murdoch-owned Star Television employs Indian journalists and has shown no interest whatsoever in trying to project the reality of India, its poverty and squalor, or its caste-based atrocities and communal divide any differently than any other private Indian-owned channel would do. If the unspeakable depravity of anti-Muslim massacres in Gujarat were reported, it was more because of the very nature of TV journalism in which one shows pictures. But after the first few days of showing clips, that, too, has stopped. Even today, atrocities continue to take place; refugee camps are being closed down, homeless people are being sent away, even though the government knows they have nowhere to go.

None of this has been reported, even in wholly foreign-owned TV channels, though some newspapers have published stories giving these and other gory details. Foreign investment has thus merely affected the form of TV, making it more presentable and attractive, while its content remains largely the same. This has helped reduce Hindu xenophobia considerably.

The second factor is that a number of Hindu-chauvinist NRIs have shown interest in investing in the newspapers that are already being run by RSS supporters throughout the country. No wonder Naresh Mohan, the BJP member of parliament (MP) and owner of Dainik Jagran, a Hindi daily published from several centers in volatile Uttar Pradesh, was among the most vociferous supporters of the move. So were cabinet ministers close to the RSS, which was originally opposed to liberalization itself - indeed, it even now continues to be opposed to the globalization process.

Hindu-chauvinist NRIs have emerged as the mainstay, at least the main financiers, of the militant fundamentalist movement in India. Indian Hindu businessman, the original financiers, are becoming wary. Frequent curfews imposed after communal violence hurt their business. But the NRIs have no such problem. Ensconced in the security provided by the multicultural and secular West, they can afford to play footsie with the militants of their choice. The role played by Gujarati-language newspapers in inflaming sentiments of Hindus after their co-religionists were killed in Godhra town and then keeping the flame of hatred alive, leading to segregation and ghettoization of Muslims not only in cities but also in villages, has kindled their interest in the print media greatly.

This is partly because newspapers alone can be published exclusively for certain communities. While perhaps a few copies will still reach others, by and large they can be community-oriented, while this cannot be done with television or radio. This is the great advantage of modernizing newspapers and bringing about sleeker, more presentable purveyors of hate.

Next: Why India fears foreign editors

(©2002 Asia Times Online Co, Ltd. All rights reserved. Please contact ads@atimes.com for information on our sales and syndication policies.)