Government To Clarify On Applicability Of FDI Policy On Digital Media: Sources

According to official sources, the Government of India is expected to come forward with a clarification on the applicability on foreign direct investment policy on the digital media sector. As of now, the current overseas investment policies and norms are silent on the fast-growing digital media section.

As per current foreign direct investment policies, 26 per cent FDI equity inflows is permitted under the government route for approval in the print media sector. Similarly, 49 per cent is allowed in the broadcasting content services sector via the government rout for approval.

However, 100 per cent foreign direct investment equity inflow is allowed for up-linking of non-news and current affairs' TV channels, and down-linking of TV channels through the automatic approval route.

According to a source, “In the FDI policy, digital media does not find a place. As the sector is growing fast, we are looking at it will come under FDI cap or not.”

The commerce and industry ministry is working on the proposal said the sources.

Talking about the proposal, Deloitte partner Jehil Thakkar said that this is a great move by the government as it would help media companies to raise additional capital for their digital media segment.

"The government should clarify about the FDI cap in the sector and whether that FDI will be coming through automatic route or not, he said.

Thakkar further said that at the moment a crucial part of the development in the media sector is coming from the digital area. "Additional capital is needed to keep this growth going and FDI would be the most welcoming thing in this."

In her maiden budget in July, Finance Minister Nirmala Sitharaman said that the government is considering further opening up foreign direct investment in aviation, media (animation, AVGC) and insurance sectors with the aim of encouraging more overseas investment into the country.

Foreign direct investment is a significant factor of economic growth. Apart from facilitating economic development, FDI equity inflows also helps in generating more jobs, brings an inflow of new technology, managerial knowhow, and improved infrastructure.