Digital media means any media that are encoded in machine-readable formats. Digital media can be created, viewed, distributed, modified and preserved on digital electronics devices. Digital media has exploded in growth in
Prior to the PN4, there was no foreign direct investment sectoral cap prescribed for entities engaged in streaming digital media. Under the erstwhile FDI Policy of the
Accordingly, the DPIIT issued a clarification on 16th
- Digital media entity streaming/uploading news and current affairs on websites, app or other platforms.
- News agency which gathers, writes and distributes/transmits news, directly or indirectly, to digital media entities and/or news aggregators.
- News aggregator, being an entity using software or web application, aggregates news content from various sources, such as news websites, blogs, podcasts, video blogs, user submitted links, etc in one location.
Consequently, entities/companies falling within the clarifications would be required to align their FDI shareholding to 26% level with the approval of the central government. The timeline indicated to comply with the FDI shareholding is within one year from the date of issue of the Clarification.
The investee entity is responsible for compliance with the FDI Policy. In addition, the investee entity would also have to ensure compliance with the following conditions in relation to management and hiring personnel:
- Board of Directors: The majority directors on the board of the Company are required to be Indian citizens.
- The Chief Executive Officer: The Chief Executive Officer is required to be an Indian citizen.
- Security Clearance of foreign personnel: 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. If the security clearance of any foreign personnel is denied or withdrawn for any reason, the investee company is required to ensure that the concerned person resigns or his services are terminated forthwith, upon receiving such directives from the Government.
Further, foreign investment in the broadcasting carriage services (which includes digital media news and current affairs services) are subject to the following security term/conditions as provided in Annexure 6 of the FDI Policy:
i. Infrastructure/Network/Software related requirement: (a) The officials of the licensee companies dealing with the lawful interception of services should be resident
ii. Monitoring, Inspection and Submission of Information:
a. The Company is required to ensure that necessary provision (hardware/software) is available in their equipment for doing the lawful interception and monitoring from a centralized location as and when required by Government.
b. The Company, at its own costs, is required to, on demand by the government or its authorized representative, provide the necessary equipment, services and facilities at designated place(s) for continuous monitoring or the broadcasting service by or under supervision of the Government or its authorized representative.
c. The
d. The inspection will ordinarily be carried out by the MIB or its authorized representative after reasonable notice, except in circumstances where giving such a notice will defeat the very purpose of the inspection
e. The company shall submit such information with respect to its services as may be required by the Government or its authorized representative, in the format as may be required, from time to time.
f. The permission holder/licensee shall be liable to furnish to the
g. The service providers are required to familiarize/train designated officials or the Government or officials of TRAI or its authorized representative(s) in respect of relevant operations/features of their systems.
iii. National Security Conditions: (a)The Licensor has the option to restrict the
(b) The company is not permitted to import or utilize any equipment, which are identified as unlawful and/or render network security vulnerable.
iv. Other Conditions: (a) The Licensor has the right to modify these conditions or incorporate new conditions considered necessary in the interest of national security and public interest or for proper provision of broadcasting services.
(b) It is the responsibility of the Licensee to ensure that broadcasting service installation carried out by it does not become a safety hazard and is not in contravention of any statute, rule or regulation and public policy
Comments: Due to the proliferation of growth in media coming from digital media consumption in
In addition, the Clarification definitely has brought some clarity on the type of entities that would be covered under the
i. The Clarification provides that it is applicable to entities registered or located in
ii. The Clarification clearly covers news agencies and aggregators, however, there is ambiguity on whether the Clarification is applicable to social media, search engines and websites apps who are merely social media intermediary platforms. Since the Clarification states "Digital media entity streaming/uploading news and current affairs on websites, app or other platforms", it appears that this Clarification is applicable to social media intermediary platform also.
It is also interesting to note that the FDI sectoral cap in the digital media is only pertaining to digital media entities streaming/uploading news and current affairs on websites, app or other platforms and not to non-news and current affairs streaming entities. Under the FDI Policy in the event no restriction is prescribed for a sector 100% FDI is permitted in that sector unless specifically prohibited. Hence, it is possible to assume that no FDI sectoral cap is applicable to digital media entities streaming/uploading non-news and current affairs on websites, apps or other platforms.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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