The station's backers say that they hope to increase this to around 10%.
India's first private FM radio station, Radio City, has been launched in the southern city of Bangalore.
The launch marks a milestone because until now only state-owned All India Radio has been operating FM radio stations in select cities.
Radio City is a 24-hour entertainment station promoted by Music Broadcast Private Limited (MBPL).
It is a venture run by Indian steel industrialist R K Mittal and his associates.
The station's content and marketing support is facilitated by Rupert Murdoch's Star, one of Asia's leading satellite broadcasters.
Radio City has been allowed to operate so long as it remains strictly an entertainment channel.
It will broadcast music, talk shows and weather reports in English and Hindi.
Advertising support
Revenue is to be generated from radio commercials, which currently only account for only about 2% of advertising budgets in India.
The station's backers say that they hope to increase this to around 10%.
The broadcasting of news and current affairs is barred under the terms of the contract with the information and broadcasting ministry.
The contract also stipulates that the station only has permission to broadcast over a 50 km (30 mile) radius.
With the Bangalore station in place, MBPL executives say they have plans to launch entertainment stations in Bombay, Delhi, Patna, Nagpur and Lucknow in the next six to nine months.
MBPL director, Ashok Khinvasara, said the formation of the new radio station marked the beginning of professional radio services in India.