Would The Probable 26% FDI Regulation Affect The Indian Startups?
There are speculations that the DPIIT might soon issue a clarification on 26 percent FDI in the digital media sector. Would this turn the table for startups?
With Christmas just passing by, and New Year knocking at the door, it seems that the digital media sector has been is going to have a massive impact. Certain stakeholders have raised issues over the government’s decision to allow 26 percent FDI in the digital media sector, the FDI is yet to clarify this.
What Impact Would This Bring To The Digital Media Sector?
There are two issues majorly that comes to the mind. Firstly, how would the FDI policy of the sector treat news aggregators? Secondly, what would happen to those digital media companies where the overseas investment is over 26 percent?
There have been certain industry players and experts that stated that the decision to cap foreign direct investment (FDI) in the digital media sector, to 26 percent, raises further questions. Pertinent ones among them would be talking about people looking to raise funds. This calls for cases to restrict the same.
The DPIIT is yet to give a clarification on the same.
Industry Leaders Say
There are television broadcasters that have been streaming news online, and are allowed 49 percent FDI. Leading industry leaders have said that they need clarity on this.
Also, what happens to those news sites that have a 100 percent foreign entity? The Internet and Mobile Association of India (IAMAI) had sought clarifications on the same too.
Would This Affect Businesses And Startups?
This decision is likely to have an impact on the Indian startup ecosystem. The reason is that continued FDI is pretty much critical to enable Indian digital media startups to achieve a global scale.
The DPIIT mentioned that several foreign strategic intermediaries have set up their operations in India, This was because the digital media was categorised as 100 percent FDI under the automatic route. It even said that a clarification on the non-applicability of the new FDI measure would be critical for them to continue making massive investments in India.
In Conclusion
Industry experts have expressed their opinions regarding the same, and various scenarios would have been analysed. However, chances are thick that the Indian startups might be affected with this intrusion.
