The Union Government’s decision to permit 26% Foreign Direct Investment (FDI) in the Digital Media sector has raised a lot of questions in the minds of the Stakeholders.
Having received queries from many stakeholders, the Department for Promotion of Industry and Internal Trade (DPIIT) has sought Information & Broadcasting (I&B) Ministry’s views on issues raised by certain stakeholders over the Government’s decision to restrict FDI in Digital Media to 26%.
Government had approved permitting 26% FDI under Government route for uploading / streaming of news and current affairs through digital media, on the lines of print media in the month of August.
Certain industry players and experts have stated that the move to cap FDI in the sector to 26% throws up questions that need clarifications as some of those who were looking to raise funds could be restricted.
The official stated that some of those matters are clarificatory in nature. The official added that FDI in the sector is permitted through the government approval route, so the ministry has to be consulted.
The Internet and Mobile Association of India has sought clarification on the issue. In a representation to the DPIIT, it stated that the decision would have impact on start-up ecosystem as continued FDI is critical to enable Indian digital media start-ups to achieve global scale.
Failure to clarify what is actually sought to be regulated will be a death blow to many of these start-ups, it said.
Several foreign strategic intermediaries have set up their operations in India, as digital media was categorized as 100 per cent FDI under the automatic route. A clarification on the non-applicability of the new FDI measure would be critical for them to continue making massive investments in India, it said.