The information and broadcasting ministry is understood to have recommended allowing 20 per cent FDI in the sector (at the existing FII cap), apart from shifting over to a revenue share regime from the current licence fee structure, which existing operators say makes the business unviable.
However, the ministry is believed to have favoured maintaining the ban on telecast of news and current affairs on FM radio.
"The cabinet will be taking the matter later this week, most likely on Thursday," official sources said in New Delhi.
It may be mentioned here that after the first phase of licensing did not go as expected, the government had taken views from various quarters for a new policy framework.
In July 2003, the government appointed a Radio Broadcast Policy Committee under the Chairmanship of FICCI's Amit Mitra to provide recommendations on the second phase of Private FM Broadcast liberalisation.
Later, broadcast regulator TRAI gathered and assimilated views of all stakeholders and submitted them to the I&B ministry as part of its recommendations for the second phase of licensing.
Interestingly, both suggested shifting to a revenue share regime. In May 2000, 108 frequencies in the FM spectrum were auctioned across 40 cities in the country.
Multiple round auction mechanism was followed to award the licences for a period of 10 years and the annual licence fee was escalated by 15 per cent per annum on the base of the first year fees.
However, of the 108 frequencies put on bid, only 21 are operational today and of these, two have also given notice to close down.
Only about 25 per cent of the expected licences could become operational, clearly pointing that the first phase output was not very encouraging and a new policy framework was required.