Point 1: With over 1.2 billion population, India is a dream market for any product or service. In short, a land of opportunities.

Point 2: Despite economic liberalisation started in early 1990s and followed through by successive governments, including the present one in New Delhi, India is still termed a challenging market.

Just like any other sector, India’s INR 1,157 billion media and entertainment (M&E) industry too gets affected by the two aforementioned points.

That the M&E industry holds immense potential can be easily seen in various crystal-ball gazing done.

Indian Government Economic Survey 2016, an annual report card for Indian economy released every February, states the M&E recorded “unprecedented growth” over the last two decades making it one of the fastest growing industries in India. It is projected to grow at a CAGR of 13.9 percent to reach INR 1964 billion by 2019, the Survey states, adding digital advertising and gaming are projected to drive the growth of this sector in the coming years.

The FICCI-KPMG annual report on Indian M&E sector, released in March, also reiterates the optimism. According to the report, the sector is expected to be worth INR 2,260 billion by 2020 and the advertising sector grew by 14.7 percent from INR 414 billion in 2014 to INR 475 billion in 2015.

But then what’s holding back big bang investments not only from Indian investors but also foreign ones? Especially when China, the only other market in Asia that outstrips India in terms of size and opportunities, is mostly closed for foreign investors with stringent rules relating to M&E sectors.

My theory is that despite successive governments from 1990 (it was in 1991 that economic liberalisation was set in motion in India and Indians also got exposed to satellite TV in few years from then) following up on that, full benefits have failed to accrue to the country. Reason? Various liberalisation processes and easing norms of doing business get enmeshed with other policy decisions--- some taken in isolation --- thereby continuing to make India a challenging market.

Take, for example, the much talked about government step in June in liberalising FDI investment norms for various sectors, including media, defence, pharmaceuticals and retail.

The government in June said that FDI in all broadcast carriage services like cable, MSO, DTH, mobile TV, HITS have been upped to 100 percent and brought under automatic route, which means bureaucratic and lengthy permission processes have been lessened.

Small caveat in automatic route investment norms notwithstanding, Indian companies and foreign investors should have been popping the champagne bottles. But industry reactions were sober to the extent of being subdued.

General analysis of the aforementioned decision, in short, was: the government took a big step, but not a giant one. Why?

According to government data, total FDI flow into India since April 2000 to December 2015 stood at US$ 408.68 billion. But the media sector’s share of FDI inflows from 2000-2015 was pegged at $4.48 billion.

Considering the burgeoning media industry and newer technologies coming in, this sector’s share of FDI during this 15-year period should have been higher.

So, why are foreign investors hesitant in investing in India, especially when PM Modi’s dream of Digital India can dovetail into building digital infrastructure capable of delivering many media services?

The federal government may be trying its best to ease norms of doing business in India and live up to its claim of ‘India being a fav destination for foreign investors’, other proposed and existing policy decisions not only send out confused signals, but, actually, create more impediments.

Take, for example, broadcast carriage regulator TRAI’s two discussion papers on infrastructure sharing in TV broadcasting distribution and  set-top-box interoperability .
TRAI’s contentions for floating these discussion subjects are to explore avenues to reduce expenditure of companies providing these services by doing away with duplication (in the first case) and examine whether interoperable STBs can largely benefit the consumers.

Critics of both these TRAI discussion subjects opine that if followed through and converted into regulations, both measures could add another layer of restrictions on the industry.

Hong Kong-based Asian media industry organisation CASBAA, which also has Indian members, doesn’t mince words when it said in its submission on STB interoperability that the TRAI paper was based on a “number of untested, unproven presuppositions concerning the practice of technical interoperability”.

Countering TRAI assertions, CASBAA said, “Regulator-imposed technical interoperability requirements will impose very large burdens on Indian consumers and industry players and risk stifling innovation in development of new features of interest to consumers.”

If a holistic view is taken of both the TRAI consultations, surprisingly aimed at bringing down media services to a common denominator having little USPs, it’s no wonder the likes of Comcast and Liberty Media or closer home the Hong Kong-headquartered PCCW, for instance, have not been enthused much to invest in Indian broadcast carriage segment despite FDI norms liberalisation and a whopping over 100 million TV homes still on the plate.

It’s not only TRAI, but also the general layout of the taxation and financial environment, apart from other cross-media restrictions, which would deter foreign investors.

A DTH service provider in India, for example, on an average pays 40 percent tax, including an annual 10 percent licence fee, while ARPUs range between INR 175-220 for most of the six DTH companies. Why would AT&T, parent company of American DirecTV, invest in a DTH operation in India?

Or, for that matter, why would Comcast or PCCW invest in Indian cable TV distribution when a large number of LCO operations are still far from transparent?

Add to that a slowing down of the digital rollout --- the earlier two phases of the proposed four-phased digitisation of TV services did manage to bring about increased transparency resulting in higher tax revenues for the government --- and you have a pitch that’s not conducive for fair foreign investment game.

Singapore-based market media market research company Media Partners Asia estimates approximately $2 billion has been invested by strategic and foreign institutional investors in Indian pay-TV distribution platforms, which certainly is peanuts considering  over 250 million TV homes are target consumers.

If confusing policy signals were not enough, stellar performer ISRO’s new-found love for Make In India and resultant insistence on weaning away all Indian users of satellite-based services from foreign satellites to INSAT --- informal as of now but gaining currency --- is also fodder to scare a foreign investor as such moves smack of throwback to pre-90s when India was dubbed a closed market and not an open economy.

That’s why, I would insist, till systematic changes are brought about in the country and various government organisations and regulators also see the big picture on regulations instead of functioning within their own small islands, attempts by any Indian government to make India the most favoured destination for foreign investments will not bear ripened fruit. And, in the process, full benefits won’t accrue to the consumers.

(1 USD= INR 67)

(Anjan Mitra is Consulting Editor of Indiantelevision.com and will write a fortnightly column on media matters.)