Opinion | Fuzzy direct investment

As part of its effort to liberalize foreign direct investment (FDI) rules in various sectors, the government announced that it would permit up to 26% FDI under the “government route” in digital media companies that upload or stream news or current affairs. This marks a departure from the existing policy, under which, until now, 26% FDI was allowed in print media firms and 49% FDI in broadcast television companies. Since the FDI policy earlier made no mention of digital media, there was no clarity on how much FDI was allowed in entities that operate solely online. By specifying digital media as a sub-sector, the government has offered some clarity on the matter. Digital news media has the same FDI limit as print media houses.

However, what’s baffling is the wording of the Press Information Bureau (PIB) release, which fails to define what exactly the term “digital media” applies to. While it says that the rule is for firms engaged in the “uploading /streaming” of news and current affairs through digital media, it doesn’t say if it will impact intermediaries like Facebook and Google that technically upload and stream news and current affairs. Or for that matter, digital news aggregators, such as Flipboard, that gather and serve news to customers. Further, what will happen to foreign news websites and TV channels whose content can be accessed over the internet in India?

With vast numbers in India having gone online, thanks to handheld devices, digital media now has a huge influence on people. Foreign investors would surely want to participate in the business generated by online news, even if revenue streams are thin for now. But clarity on which companies are covered and which are not would help the sub-sector realize its potential.