With Star News opening a Pandora's box, the government today decided to change the rules for foreign direct investment in news channels that uplink from India so that there was a dominant Indian partner, with a stake of at least 51 per cent in the venture.

It has also been decided that a financial institution cannot be the dominant Indian partner. This shareholder can be an individual, a company or a group of companies with at least 51 per cent Indian shareholding.

Existing guidelines state that while a foreign investor cannot hold more than 26 per cent, the Indian shareholding can be dispersed among any number of investors, allowing the foreign investor to be the largest shareholder.

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"We have decided to change the uplinking guidelines. The thrust of the new guidelines is going to be insistence on a dominant Indian partner with at least 51 per cent equity," Information and Broadcasting Minister Ravi Shankar Prasad said.

The changes will be notified by the government in the next few days.

The first channel to be impacted by today's decision will be Star News because the government has given news channels with foreign holdings a month from the issue of the notification to comply with the new norms. Indian news channels have a year to change their equity structure, if needed.

Anticipating Friday's decision, Star India had said a few days ago it was open to having a dominant Indian partner in Media Content and Communication Services, the company that has sought permission to uplink Star News content.

"With the new guidelines, we will alter the equity structure of the company. We are looking at a number of options," Peter Mukherjea, chief executive, Star India.

The decision to amend the guidelines was taken at a meeting chaired by Prime Minster Atal Bihari Vajpayee and attended by Deputy Prime Minister Lal Krishna Advani, Finance Minister Jaswant Singh, Commerce Minister Arun Jaitley, Prasad and Brajesh Mishra, principal secretary in the Prime Minister's Office.

The government today also announced that it would bring the FDI policy for news channels on a par with that for the print media.

"All FDI-related norms for the media will be on a par. The information and broadcasting ministry will update the norms regarding FDI in print, if required," Prasad said.

Under the new norms, appointment of all personnel, in editorial as well as management, will have to be made by the Indian company without any reference to the foreign company.

Moreover, the company should have complete operational independence and control over its equipment and assets.

Thinking local

• Indian FI cannot be the dominant partner.
• Total operational control with Indian company.
• All appointments have to be made by the Indian company without any reference to the foreign partner.
• FDI norms for print media may be changed, if required.