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26% FDI in digital media: What does it mean for the industry?


The present FDI policy is silent on the fast-growing digital media segment.

26% FDI in digital media: What does it mean for the industry?
In what looks like the Modi government’s latest effort to push the ‘Digital India’ campaign, the Union Cabinet on Wednesday approved 26 percent foreign direct investment (FDI) in digital media with government approval.
The present FDI policy is silent on the fast-growing digital media segment. In the print media sector, 26 percent FDI is allowed through government approval route. Similarly, 49 percent is permitted in broadcasting content services through government approval route.
"It has been decided to permit 26 percent FDI under government route for uploading/streaming of news and current affairs through Digital Media, on the lines of print media," an official statement said.
What does it mean?
The decision is expected to give a boost to the booming digital media space in the country as it will attract more investments, helping media companies to raise additional capital for their digital segment. A significant part of the growth in the media sector comes from the digital area.
"FDI in digital media is a welcome development. Clarity around this fast-growing segment of the media industry will act as an enabler for capital infusion," said Jehil Thakkar, partner, Deloitte India, adding "significant value will be unlocked in going forward."
FDI is a major driver of economic growth and a source of non-debt finance for the economic development of the country, the Commerce and Industry Ministry statement said. FDI in India dipped 1 percent to $44.36 billion in 2018-19.
Foreign investments are considered crucial for India, which needs billions of dollars for overhauling its infrastructure sector such as ports, airports and highways to boost growth.
Confusion over the new policy
Contrary to the general understanding that it will boost the sector through foreign investments, some industry experts believe the step is actually restrictive in nature as it limits FDI into an area which did not have a limit earlier.
There are certain digital news platforms in India which are already flouting this cap. For example, Bengaluru-based subscription-driven digital publication The Ken has already raised more than 26 percent FDI.
According to industry analysts, if The Ken already has FDI in excess of 26 percent, then it is a clear case of flouting the norms.
A legal expert told IANS that 26 percent imposition affects digital platforms having higher FDI.
However, the industry still awaits an official circular or notification consisting of the exact details of the new policy.
(With inputs from agencies)

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