After years of indecision, India's government has finally given the go-ahead for Direct-to-Home (DTH) broadcast services in India. In addition, foreign investment in the DTH sector has been allowed but is capped at 49%.

"The total foreign investment in the DTH broadcasting sector shall not be more than 49% of which the share of foreign direct investment will not exceed 20%," the government said in a statement.

Rupert Murdoch was thwarted in his plans to launch DTH services in India three years ago. The change in legislation allows direct beaming of services in KU or higher frequencies via satellites to small-sized dishes in homes. At present, cable networks use the C-band with requires a larger dish.

There is no restriction on the number of Indian companies which can offer DTH services but no broadcasting or cable company can own more than 20% of the total equity. And DTH facilities cannot be used for other services such as telephony or internet without separate licences. DTH companies will have to uplink from India and use an open architecture set-top box.

Indian Information & Broadcasting Minister, Sushma Swaraj, told Screen International that the restrictions were needed to make sure the field remains competitive. "It's a major step forward towards convergence, but we have opened [the market] up with extra caution and care so that content is also regulated and no vertical monopoly is created in this field," Swaraj said.

Potential bidders for the $2.5m licences include Indian corporate giant Reliance Industries, which has recently made aggressive moves into media, local telco HFCL, which is investing in the film and TV sector in partnership with Murdoch rival Kerry Packer, and local entertainment and broadcasting giant Modi Entertainment.

The licensees will have to share 10% of revenues with the government and will have to carry all the TV channels of state broadcaster Doordarshan. The licence fees will also have to be accompanied by a $10m bank guarantee.