New Delhi: As part of an all-out effort to boost the slumping Indian economy, the government on Wednesday decided to relax norms for Foreign Direct Investment in several sectors that includes opening up of 26% FDI in digital media against the print media and broadcast allow for 26% and 49% FDI respectively.
Finance minister Nirmala Sitharaman made the announcement for change in FDI rules for media during the Union budget in July. The subsequent announcement made yesterday allows overseas investments through government approval for uploading and streaming of news and current affairs through digital media, on the lines of print media, the government said.
While there was no explicit policy on digital media previously,the move had cheered few whereas the others are yet to get a clear picture on the impact of the change in Govt’s policy decision. According to the analysts, the effort will result in digital initiatives of various media companies being treated as a separate entity and the same will be entitled to raise their own investment.
Welcoming the development, Jehil Thakkar, Partner Deloitte India said, “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. Significant value will be unlocked going forward”.
“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%?”, Manav Sethi, Group Chief Marketing Officer, Eros International.
Keeping his reaction short and sweet, Sanjay Reddy, Founder and CEO of Hyderabad based listed digital media company – Sillymonks stated that the move will be a boon in the short term but a bane in the long term and it need to figure a balance.
Sabyasachi Mitter, Founder & Managing Director, Fulcro said, “The policy announcement of FDI in digital media hides more than it reveals in the small paragraph right at the end of the document released. It assumes that a television broadcaster also is not a digital media streaming company as the former gets a 49 per cent FDI limit and the latter 26 per cent. In practically all cases, television channels have websites and mobile apps that show live TV and thus, practically all television channels, unless they set up different legal entities, fall under the 26 per cent cap on FDI. For pure digital media “news and current affairs”, who currently had no limit on FDI, the limit will now be 26 per cent, in effect the policy appears restrictive. I hope the Government consults industry experts and refines the policy in line with the real world.”
“The M&E industry grew by 13.3 per cent in FY19 (as compared to FY18) on the back of colossal growth of 43.4 per cent in digital media segment. This is despite the fact that while the FDI policy currently permits 49 per cent foreign investment in Up-linking of News & Current Affairs TV Channels and 26 per cent in print media sector, both through government approval route, it was silent on FDI in the digital media segment” added Himanshu Parekh, Partner and Head, International Tax, KPMG in India
Gautam Sinha, CEO – Times Internet said, “At present, a significant part of the growth in the media sector is coming from digital consumption of content with around 25% of the Indian youth being hooked to this medium. It is great that the potential of digital content is being recognized and an industry-specific exception is being made in the guidelines. I believe this move will definitely benefit the online media industry since it will help companies raise additional capital from oversea players/investors.”
“I think it is a good start and as we tread with caution, I would like to see it move higher in years to come” added Sinha.