Representational Pic
Representational Pic

New Delhi: The government's move to cap FDI in news and current affairs digital media to 26 per cent throws up questions that need clarifications as some of those who were looking to raise funds could be restricted, according to industry players and experts.

The Union Cabinet on Wednesday approved permitting 26 per cent FDI under government route for uploading/streaming of news and current affairs through digital media, on the lines of print media.

"This throws up some questions which need some clarifications," Deloitte India, Partner Jehil Thakkar told PTI. He said clarity is needed on how to treat cases of television broadcasters which are streaming news online, but are allowed 49 per cent FDI.

"What happens to those, whether they qualify under 26 per cent or 49 per cent (FDI)? What happens to news websites which are 100 per cent foreign entity?" he wondered.

Also in future, some of these which were looking to raise capital or looking to get bought out by a foreign investor will now be restricted from doing so, Thakkar said.

Expressing similar views, Eros International Group Chief Marketing Officer Manav Sethi said 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 per cent and their online streams, which will effectively have 26 per cent?," he said.

Terming it as a "bizarre move from the government", founder Nikhil Pahwa in a series of tweets said that "this is not permission, it is a restriction. Digital media did not have limits earlier".

"They're equating digital media with TV putting a limit equivalent of that of print. How does that make sense," he added. Moreover, Pahwa also wondered if "FDI regulations will apply to those uploading content on YouTube or Facebook, or to the platforms (Facebook, YouTube) themselves".

Thakkar, however, said the government announcement gives clarification for print or broadcast media players "if they want to spin off a separate arm, seek a separate valuation and raise capital." According to sources, the government has not received any representation on the issue so far from the industry.

However, they said that the regulation was aimed at addressing a "policy vacuum" in the sector and resolving two differing interpretations related to foreign investment in digital media segment.

According to one view, if there is no mention in the existing FDI policy, then 100 per cent foreign investment is considered to be allowed under automatic route.

As per the other view, if a mention has been made in the FDI policy related to a certain sector, then businesses which are related directly or indirectly to that segment would have to follow the notified regulations.

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Free Press Journal