Here is an Indian puzzle. You are free to surf foreign-owned TV channels like CNBC, BBC and even listen to a tendentious commentary on Kashmir on Pakistan state-owned PTV. There's also the online edition of The New York Times waiting to be downloaded. You are free to see Karachi's Dawn on the Internet. But when it comes to the newspaper or the magazine delivered at your door, the rules change. It must be desi-owned to the last paisa of its publisher's capital.

That's the rule set by Jawaharlal Nehru's cabinet on September 13, 1955. Or so it has been said by generations of politicians. The latest of them is the Parliamentary Standing Committee on Information Technology, which has circulated among its 45 members a draft report on the entry of foreign print media and foreign direct investment (FDI) in print media. The draft report swears by the 1955 resolution and recommends continuing the blanket ban on foreign investment.

The 1955 resolution has two operative sentences: "No foreign-owned newspaper or periodical should, in future, be permitted to be published in India." And, "Foreign newspapers and periodicals which deal mainly with news and current affairs should not be allowed to bring out Indian editions." The draft report says it has "fully taken into account both the contextual significance of the cabinet resolution of 1955 and the reality of globalisation". That's reading beyond the text of the resolution, to a 1953 note by the Press Commission, which said, "We consider it highly desirable that proprietorial interests of daily and weekly newspapers should vest predominantly in Indian hands." Despite this note, the cabinet resolution did not specifically restrict foreign investment. It prohibited "foreign newspapers" from publishing Indian editions. The irony is that in the interest of the free flow of information, the Nehruvian vision allowed duty-free import of newspapers and magazines without any limit. Says Shekhar Gupta of The Indian Express: "The present policy is in fact elitist. Only readers who can afford the high imported price of publications get to read them-local editions are forbidden."

It is, therefore, a specious argument that foreign investors can't buy a stake in the Indian print media because Nehru had forbidden it. Nehru and his colleagues perhaps never thought about it as no Indian media stock was traded in those times. Besides, the resolution spoke only about the print media because there was no other. Interestingly, unlike China, India has never sought to make a law against foreign ownership of satellite TV channels viewed on its soil. So has it suffered for its openness? As The Asian Age Editor-in-Chief M.J. Akbar says, "A shoddy argument often trotted out in support of keeping FDI out of the print media is that 'enemy' money will take over Indian newspapers. Has it taken over television-Zee or Aaj Tak?" During the Kargil War, Rupert Murdoch's Star TV matched others in its patriotism.

Not everyone in the media is willing, though, to accept that what is good for TV should be good for print too. Editors' Guild President Mammen Mathew of the mega-circulation Malayala Manorama, says, "Given a chance I'd have imposed on the electronic media the same kind of restrictions on FDI applicable to the print media." Why? "Because there may be dangerous foreigners behind apparently decent direct or portfolio investors. Like that Saudi prince who has a stake in every US media company including Time Warner."

The concern, however far-fetched, is repeated in a letter to the prime minister by Pratap Pawar, newly elected president of the Indian Newspaper Society (INS) and owner of the Marathi daily Sakal. "Attempts by foreign media interests to dabble in the internal politics of countries are not unknown. Surely the Government would not want such destabilising forces to operate in our country." The politically well-connected Pawar's missive was obviously music to the ears of the majority in the Standing Committee. The draft report itself talks of a "cultural invasion", the suggestion being that those favouring FDI in the print media are insufficiently committed to India.

What is lost sight of in the avalanche of heady slogans is that while the entire economy has been liberalised, inducing a revolution in the communication sector, the print media has been cocooned from change. Even a decade ago, the print media accounted for over 80 per cent of the total advertising revenue. This came down to 52 per cent in 2000-01 and the trend is clearly not encouraging, with more and more revenue getting deflected to TV and the Internet. As Aveek Sarkar, chief editor of the Ananda Bazar Patrika Group in Kolkata, says, "A printed newspaper today is a bit like oral storytelling before Gutenberg. It'll be history soon and people will make their own newspapers, if they're still called newspapers, on the Internet."

While the printed daily has a problem of existence, the newcomers among them and the young and dynamic ones have limited access to capital. Banks are averse nowadays to lend money to the newspaper industry, supposedly a high-risk business, and the entry cost is further raised because of the FDI bar which makes it almost impossible for a publishing house to enter the capital market. If a newspaper stock is not available to foreign buyers it is unlikely to receive a warm welcome by domestic buyers either. The valuations of the business are naturally likely to be diminished. Last year, the Mid-Day Group in Mumbai had to shelve an IPO because the Government, under pressure from rival groups, got SEBI to force it to withdraw its offer to FIIs, NRIs and OCBs. Narendra Mohan of the Jagran Group of Newspapers, who as a BJP Rajya Sabha MP and a member of the committee, is a vocal champion of freeing the industry for FDI, says that but for the ban he would have raised Rs 150 crore by selling a minority stake to foreign buyers. "I needed the money to upgrade and expand our presses," he says.

Benefiting from the capital-starvation of the majority of print publishers is a gaggle of the well- entrenched-like The Times of India, the Hindustan Times, The Hindu and Malayala Manorama. The continuance of their dominant positions in markets like Mumbai, Delhi and Chennai enables them to corner almost the entire volume of advertisement income. And such skewed distribution of the adspend helps them to carry on page and price wars, thus leaving their troubled rivals in the double-bind of poor advertising revenues and static sales.

Egged on by the big boys, the Government doesn't even allow Indian FIs with some foreign shareholding to invest in newspapers. ICICI is barred from investing in newspapers for this reason. There is, however, a growing group of publishers now totalling 14 from across the country which is pushing the Government to open the sector like it has done elsewhere.

The Standing Committee's report is likely to be submitted next week. Its verdict may well be divided with the dogma-following CPI(M) Chairman Somnath Chatterjee opposing FDI while the BJP and some others issue a dissenting note. The Government is inclined to open the print media sector, especially the non-news and non-current affairs portions, to FDI, but is scared to go the whole hog and upset the behemoth barons of the press who are fighting desperately to protect their profitable turf.