News aggregators, news agencies which supply information to digital media firms and companies uploading news and current affairs on websites will have to comply with the 26 per cent foreign investment cap, the government said on Friday. These companies "would be required to align their FDI to the 26 per cent level with the approval of the central government, within one year from the date of issue of this clarification", the Department for Promotion of Industry and Internal Trade (DPIIT) said.
In August last year, the Union Cabinet approved 26 per cent FDI (foreign direct investment) under government route for uploading/streaming of news and current affairs through digital media, on the lines of print media. A section of industry players and experts had stated that the move to cap FDI in digital media sector to 26 per cent throws up questions that need clarifications.
The department said that it had received representations from stakeholders seeking clarifications on certain aspects of this decision. "After due consultations, it is clarified (that) the decision of permitting 26 per cent FDI through government route would apply" to certain "categories of Indian entities, registered or located in India," it said.
The categories are – entities uploading / streaming news and current affairs on websites, apps, other platforms; news agencies which gathers, writes and distributes/transmits news, directly or indirectly, to digital media entities and/or news aggregators; news aggregators which, using software / web applications, aggregates news content from various sources, such as news websites, blogs, podcasts, video blogs, in one location. It also said that the compliance with the FDI policy would be the responsibility of the investee company.
The company would also have to adhere to certain conditions such as the majority directors on the board of the firm shall be Indian citizens; the chief executive officer shall be an Indian. "The entity shall be required to obtain security clearance of all foreign personnel likely to be deployed for more than 60 days in a year by way of appointment, contract or consultancy or in any other capacity for functioning of the entity prior to their deployment," it said.
It added that in the event of security clearance of any of the foreign personnel being denied or withdrawn for any reasons whatsoever, the investee firm will ensure that the concerned person resigns or his/her services are terminated forthwith after receiving such directives from the government. The 26 per cent FDI rule will apply to digital media entities registered/ located in India. Sources said that the clarification will help in the development of improved regulatory framework, creation of a more vibrant, accountable digital news media ecosystem with enhanced foreign direct investments into India.
"Genuine FDI flows, not inimical to India's interests, into digital media news entities will be facilitated," they said. The clarification also provides a level-playing field for Indian news publishers on digital media with those funded by foreigners and it would bring parity between FDI limits in print and in digital media entities.
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