MUMBAI: Even as the radio industry witnesses shifts in various aspects like programming, growth and advertising, it has still not managed to emerge as a significant medium yet and its growth is largely being held back by the strict government regulations.

While advertisers termed it as a year of flat growth for radio, most broadcasters felt the medium grew decently well inspite of being surrounded by several issues affecting it. But media consultants state that 2012 witnessed slight growth for the medium and it grew mainly by volumes.

Speaking with Radioandmusic.com, KPMG media & entertainment executive director and principal partner Jehil Thakkar said, "Radio has not yet emerged as a significant medium in the space and last year it mainly grew in terms of volumes. It all depends on the FM phase III now. If it is implemented this year, there might be a significant growth for the medium otherwise we are looking at a flat year ahead."

The industry did witness many challenges like the delay in implementing the FM phase III policy, similarity in content and a host of government regulations holding it back. The only ray of hope for them proved to be the innovation in programming working in their favour and the copyright issue largely being resolved.

"The government regulations are mainly holding the FM industry back. They do not have many areas to explore and are thus going with the lowest common denominator," he added.

Radio currently contributes a total of four per cent in the total advertising pie, which is stated to grow to anywhere between 6-8 per cent if the government regulations are eased and amended keeping in mind the benefit of the radio broadcasters. While a high reserve fee and an e-auction policy still stand as an obstacle ahead, Thakkar affirms that the license fees will be driven by the total revenue holding of broadcasters.

Moreover if the phase III policy is implemented this year, it opens up several new opportunities for broadcasters to grow and thus provides significant headroom for the medium to grow ahead.

Apart from radio, Thakkar also spoke about the Indian music industry and attributed the growth in the music industry to the largely growing digital platform with the launch of players like iTunes and Flyte in the space.

"It is very clear that digital music is where the industry growth is coming from and it will continue to be robust this year as well. It will grow due to a rising number of e-stores, so consumption will also help in more growth," he stated.