DPIIT Expected To Issue Clarification On 26 Per Cent FDI in Digital Media Sector

As per reliable sources, the Department for Promotion of Industry and Internal Trade (DPIIT) may soon issue a clarification on the concerns raised by certain stakeholders over the government’s decision to allow 26 per cent foreign direct investment in the digital media sector.

Industry experts and players said that the big move to cap foreign direct investment equity inflows in the digital media sector to 26 per cent raised important questions that need to be answered as those looking to raise funds could face restrictions.

There are mainly two issues that need clarification—how the foreign direct investment policy would treat and handle news aggregators and what will happen to the digital media companies that have received foreign investments of more than 26 per cent.

As per the source, the department is expected to give a clarification on the matters stated above.

The department has already discussed the issue with the Information and Broadcasting Ministry.

Jehil Thakkar , Deloitte India Partner had said that clarity was required on how to treat cases of television broadcasters that stream news online, but are permitted 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 said.

Internet and Mobile Association of India, in a representation to the Department for Promotion of Industry and Internal Trade 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,"