Companies operating news portals on Thursday expressed disappointment with the government’s new Foreign Direct Investment (FDI) policy capping the investment in digital media at 26% and asserted that the measure would impact both existing digital platforms as also affect new platforms that may be looking to expand.
On Wednesday, Commerce Minister Piyush Goyal announced that the Cabinet had cleared FDI up to 26% under the “government route” for digital media companies that upload or stream news and current affairs.
This is a departure from existing policy, as until now only the print media and news broadcast television companies in India have had FDI caps of 26% and 49% respectively, while there have been no restrictions so far on foreign investors or entities running digital media ventures aimed at Indian consumers.
Several digital media outlets that The Hindu spoke to were unwilling to speak on record but explained that some of them would likely have to restructure and look for Indian investors as they had more than 26% foreign investment.
“The Indian investors are not bullish and are mostly reluctant to invest in media portals, more so in the current economic situation,” said Vignesh Vellore, CEO of The News Minute . “The new policy hurts smaller players like us and the ones who are looking to launch new projects. In future, when we have to look at investments to scale up our operations, this kind of cap will be very discouraging,” he asserted.
The policy is being viewed in the industry as an effort to indirectly regulate the content at digital news outlets.
“Digital news media was unregulated & thriving so far. 100% FDI was allowed in start ups. Now govt wants to limit FDI to 26%.This is regressive. Cos already operating with 50% or 100% FDI will have to divest foreign equity in favour of domestic when capital is scarce and scared!” M. K. Venu, a Founding Editor of The Wire , tweeted.
In a series of tweets, Nikhil Pahwa, founder of Medianama, a portal dedicated to Digital and Telecom businesses in India, described the new policy as ‘restrictive’. “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 asked.
