The Narendra Modi government announced that it would permit up to 26% Foreign Direct Investment (FDI) for digital media companies which stream news and current affairs. Government’s approval is required for each proposed FDI project on a case by case basis. This was previously applicable to only print media in India.
The extant FDI policy provides for 49% FDI under approval route in Up-linking of News & Current Affairs TV Channels. It has been decided to permit 26% FDI under Government Route for Uploading / Streaming of News & Current Affairs through Digital Media.
Industry experts say that the Modi Government has been exceptional and at the forefront of creating digital infrastructure as public good. There was no explicit policy on digital media previously.
Union Minister of Finance Piyush Goyal said, India can maintain its position as an attractive investment destination and grow in the coming months.
KPMG in India Partner & Head, International Tax Himanshu Parekh noted that there was no FDI in digital media unlike TV news channels and print media despite the fact that digital media segment is witnessing exponential growth.
Jehil Thakkar, Partner at Deloitte India comments, “FDI in Digital Media is a welcome development. This will now allow digital platforms to be unlocked from the bigger companies and seek separate valuation. The move will enable capital infusion in digital media platforms.”
For example, video streaming services like VOOT or ZEE5 that are run by broadcast networks like Zee Entertainment Enterprises Ltd or Viacom18 Media Pvt Ltd may now be listed as separate companies and raise their own investment.
Eros International Group Chief Marketing Officer Manav Sethi said that the scope of the impact will be determined by the wording of the provision in the FDI policy. “News and current affairs are present on social media platforms, on digital platforms that are subsidiaries of foreign brands etc. How would you differentiate between TV channels which have 49% and their online streams which will effectively have 26%?”
Gautam Sinha, Times Internet CEO said this is a good start and the government should increase the limit in the years to come.
Foreign Direct Investment (FDI) policy currently permits 49% foreign investment in Uplinking of News & Current Affairs TV Channels and 26% in Print Media sector both through Government Approval Route, it was silent on FDI in the digital media segment.