As many as 839 more FM radio stations, especially for smaller towns and cities, would be in the offing by the year-end.
A ministerial panel on Wednesday approved the auction of licences for the third phase of FM (frequency modulation) radio channels for which the information and broadcasting ministry will set guidelines soon.
Around 86 Indian cities have FM radio stations and the government aims to extend the entertainment facility to most of towns having population of one lakh.
An empowered group of ministers headed by finance minister P Chidambaram had asked the telecom minister to release additional frequency to I&B ministry to allow auction, through which the government aims to raise R5,000 crore.
The government had earned about Rs 1,700 crore through earlier two phases of auction. For phase-III, the government is hopeful of a rich haul because of the popularity of the FM radio stations.
I&B secretary Uday Kumar Varma said that the ministerial panel had cleared the proposal and sought some changes in request for proposal to be sought from private players. "We will issue auction guidelines soon," he said.
Chidambaram in his budget speech had announced FM radio expansion to cover 294 cities. The process for the same was initiated by him through approval of the ministerial panel which rejected the I&B ministry's suggestion to link the licence fee with the percentage of total revenue generated by a FM radio station as is the case with telecom licences.