Certain industry players and experts have stated that the move to cap FDI in the sector needs clarification and could deal a death blow to many start ups.
The Department for Promotion of Industry and Internal Trade (DPIIT) has sought views of Information and Broadcasting Ministry on issues raised by certain stakeholders over the government’s decision to permit 26% FDI in digital media sector, an official said.
In August 2019, the government approved permitting 26% FDI under government route for uploading/streaming of news and current affairs through digital media, on the lines of print media.
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.
“Those issues which were raised on the decision, we have sent that to the Information and Broadcasting Ministry and they are looking into it for suitable clarification,” the official said.
Some of those matters are clarificatory in nature, the official said, adding that FDI in the sector is permitted through government approval route, so the ministry has to be consulted.
Deloitte India Partner Jehil Thakkar had said that clarity was needed on how to treat cases of television broadcasters which stream news online, but are allowed 49% FDI.
“What happens to those, whether they qualify under 26% or 49%? What happens to news websites which are 100% foreign entity?” he had said.
Internet and Mobile Association of India too had 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 would be a death blow to many of these startups, it said.
“Several foreign strategic intermediaries have set up their operations in India, as digital media was categorised as 100% 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.