The Centre on Wednesday announced that it would ‘permit’ 26 per cent foreign direct investment (FDI) under the ‘government route’ for digital media companies which upload or stream news and current affairs. Commerce Minister Piyush Goyal’s announcement will now bring digital media on the same platform as the print media.
Until now only Indian print media and news broadcast television companies have had FDI caps of 26 per cent and 49 per cent respectively. There had been no restrictions as such on foreign investors or entities running digital media business catering to Indian consumers.
While the domestic media companies have welcomed the government’s decision to bring the digital media under the ambit of the FDI policy regime, the companies operating news portals expressed disappointment with the government’s new Foreign Direct Investment (FDI) policy capping the investment in digital media.
Indian Newspaper Society president Jayant Mammen Mathew said: “It is a right decision for the government to cap FDI in digital media at 26 per cent, which is in line with the FDI (limit) in print. This will ensure Indian news sites have a level playing field with news aggregators and other digital news sites.”
Meanwhile, many digital media outlets, who did not want to be quoted, expressed displeasure, as some of them would now have to restructure and look for Indian investors as they had more than 26 per cent foreign investments.
There is also ucertainity about the government’s order as it lacks detail. The notification says, “it has been decided to permit 26% FDI under government route for uploading/ streaming of news and current affairs through digital media, on the lines of print media”, and industry experts believe that the fine print of the order needs to be seen before understanding its impact. There are several 100% foreign-owned digital news outlets operating in India, and it is not sure whether they will have to induct Indian shareholders to continue operating.
“Basically the new norms look very restrictive. Even TV news – which is a linear medium — is allowed 49 % FDI. Internet is borderless then what sense does 26% restriction make?”, a media executive said, declining to be named. “Nowhere in the world you need government permission to set up a digital news site and there are no restrictions on FDI,” he added.
Some also questioned how this move will be implemented, asking whether all digital media with more than permitted FDI will be banned as China does.
“The Indian investors are not bullish and are most reluctant to invest in media portals, more so in the current economic situation,” said Vignesh Vellore, CEO of The News Minute. “The new policy hurts smaller players like us and the ones who are looking to launch new projects. In future, when we have to look at investments to scale up our operations, this kind of cap will be very discouraging,” he asserted.
Owing to the sensitivity of the sector the government’s decision is being viewed in the media industry as an effort to indirectly regulate the content at digital news outlets.
Former secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Ramesh Abhishek said: “The government has provided much-needed clarity on FDI in digital media. This has been rightly kept on par with FDI in print media. This provision is likely to apply to all those who disseminate the news through digital media in any form. The policy should cover the aggregators of news as well.”
The way news aggregators have been flourishing, has been a concern for the government, especially as China has become an aggressive investor in this sector, with many Chinese-owned or funded entities creating and curating content.
Chinese companies like ByteDance which owns 100 per cent of Helo, the fastest-growing vernacular news app in India and also TikTok, the fastest-growing social network in India. Similarly, Chinese news aggregators, including UCNews (owned by Alibaba), Opera (whose largest shareholder is Beijing Kunlun Tech Co Ltd) and NewsDog (incubated in China and funded by Tencent) actively owns or has large stakes in the biggest news, vernacular language news, as well as social networks in India with no controls whatsoever until the recent FDI regulation.