26% FDI in digital media to favour Indian media houses, clarifies government

The clarification says permits will be required for employing foreigners while the CEO, board and top management has to be Indian

BestMediaInfo Bureau
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26% FDI in digital media to favour Indian media houses, clarifies government

The government has issued a clarification on 26% FDI in digital media. The new rules will provide a level playing field for Indian media houses and will keep away Chinese players, the government claimed.

The clarification said that permits will be required for employing foreigners while the CEO, board and top management has to be Indian.

The government clarified that the 26% FDI in Digital media rule will apply to:

a) Entities uploading/ streaming news and current affairs on websites, apps, other platforms;

b) News agencies which supply news to digital media entities and/or news aggregators;

c) News aggregators which, using software / web applications, aggregate content from various sources in one location.

Adequate time period of 1 year has been permitted to digital media news entities to align their shareholding with requirements.

The 26% FDI rule will apply to digital media entities registered/ located in India. Implications and Benefits:

Addresses lack of Security conditions / terms: Industry participants had highlighted absence of regulatory oversight over digital media news entities under the FDI Policy unlike the broadcast media sector. Security conditions / terms requiring majority of directors and the Chief Executive Officer to be Indian citizen(s) and security clearance of foreign personnel were applicable to the broadcast content services sector.Now, the application of these requirements to digital media news entities as well, will ensure transparency about the involvement of foreign elements in the affairs of the Indian entity. The Government seeks to facilitate a level playing field with FDI shareholding at 26%.

Curbs Chinese / foreign owned digital media news entities: Some of the largest digital news sources in India such as Daily Hunt, Helo, UCNews, Opera News, and Newsdog appear to be majority Chinese / foreign owned. These news entities may serve as propaganda vehicles inimical to India’s interests and seek to influence Indian elections. Genuine FDI flows, not inimical to India’s interests, into digital media news entities will be facilitated. Some news entities especially inimical to India’s Interests may be impacted by the FDI Policy requirements particularly requirements regarding Indian citizenship of majority directors and CEO.

Puts India’s National Interest first: Government reforms have resulted in availability of cheap internet data, explosion of internet usage and proliferation of digital media news entities. Threat of ‘fake news’, propaganda vehicles and information warfare / foreign influence & interference in India’s domestic affairs is more real than ever, particularly from our hostile neighbours. Ample examples of entities putting out distorted news in various countries of the world. E.g., allegations that foreign state sponsored media outlets are running disinformation campaigns & trying to influence the forthcoming US elections. Policy prescription puts India’s National Interest first and curbs these threats.

Addresses concerns of stakeholders regarding circumvention / evasion of FDI policy: Significant proportion of ‘news & current affairs’ content published / consumed on digital media emanates from ‘news agencies’ and ‘aggregators’.

With this clarification, concerns of stakeholders regarding circumvention and evasion of FDI policy prescription through ‘news agencies’ & ‘aggregators’ have been addressed.

Level Playing field to Indian Digital Media Entities: Provides a level playing field for Indian news publishers on digital media with those funded by foreigners. Brings parity between FDI limits in Print & FDI in Digital Media entities.

Further incentives and benefits in the pipeline: The Government is evaluating further incentives and benefits that may be allowed to digital media news executives and digital media news entities to further improve ‘ease of doing business’ and positively impact the emergence of Indian digital media news.

In this regard, the Government has proactively issued a Press Release on 16 October 2020 mentioning that the Ministry of Information and Broadcasting will be considering extension of various benefits (e.g., PIB accreditation, CGHS benefits, concessional rail fare, eligibility for digital advertisements), currently available to traditional media (i.e., print and TV), to digital media news entities as well. The Government has also encouraged digital media news entities to form self-regulating bodies for furthering their interests and interactions with the Government.