DPIIT consults I&B Ministry regarding 26% FDI in digital sector

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 per cent FDI in the digital media sector, an official said. In August, the government approved permitting 26 per cent foreign direct investment (FDI) under government route for uploading/streaming of news and current affairs through digital media, on the lines of print media.

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Clarity awaited on government's decision

Certain industry players and experts have stated that the move to cap FDI in the sector to 26 per cent throws up questions that need clarifications as some of those who were looking to raise funds and 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 the government approval route, so the ministry has to be consulted. Deloitte India Partner Jehiel Thakkar had said that clarity was needed on how to treat cases of television broadcasters which stream 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 had said.

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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 an impact on the 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 will be a death blow to many of these start-ups, it said. "Several foreign strategic intermediaries have set up their operations in India, as digital media was categorized as 100 per cent 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. 

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