ED slaps Rs 3.44 crore penalty on BBC WS India for FDI violations; fines 3 directors

The Enforcement Directorate (ED) has imposed a penalty of over Rs 3.44 crore on BBC World Service India for violating foreign direct investment (FDI) regulations, officials said on February 21. The financial penalty also extends to three of its directors, each fined more than Rs 1.14 crore, following adjudication proceedings under the Foreign Exchange Management Act (FEMA).

The ED's action follows a show-cause notice issued on August 4, 2023, to BBC WS India, its three directors, and its finance head for multiple violations under FEMA. According to sources, BBC WS India, a 100 percent FDI entity, engaged in digital news and current affairs but failed to reduce its FDI stake to 26 percent, as required by Indian regulations.

The Department for Promotion of Industry and Internal Trade (DPIIT) had set the FDI cap at 26 percent for digital media under the government approval route through a press note issued on September 18, 2019. However, BBC WS India continued operating at full foreign ownership, leading to what officials termed a “gross violation” of the law.

The ED’s order imposes a total penalty of Rs 3,44,48,850 on BBC WS India, in addition to a daily fine of Rs 5,000 from October 15, 2021, until compliance is met. Additionally, BBC directors Giles Antony Hunt, Indu Shekhar Sinha, and Paul Michael Gibbons have each been fined Rs 1,14,82,950 for their involvement in company operations during the period of violation.

The FEMA case against BBC WS India stems from a survey conducted by the Income Tax Department in February 2023 at its New Delhi and Mumbai offices. Following the survey, tax officials claimed they had “gathered several evidences” suggesting non-disclosure of certain remittances as taxable income in India by foreign entities linked to BBC.

The ED’s penalty comes **nearly 18 months after issuing show-cause notices** to BBC WS India and its executives in August 2023, marking the latest regulatory action against the broadcaster over its financial operations in India.

(With inputs from agencies)