In his budget speech yesterday, Finance Minister Mr.P.Chidambaram had proposed several significant changes that will affect the digital media industry in the country. While the minister didn't mention any direct proposal for the digital sector, several proposals in the budget will have a significant effect on the digital media industry. Here's a consolidated sector wise impact of this year's budget on the digital media industry: (Thanks to Pallav Narang from Arkay&Arkay for contributing to this article) Investments & Funding FDI & FII Re-classification: In order to remove the ambiguity that prevails on what is Foreign Direct Investment (FDI) and what is Foreign Institutional Investment (FII), the Finance Minister has now re-classified FII and FDI. According to the new classification, if an investor has a stake of 10% or less in a company, it will be treated as FII and, if an investor has a stake of more than 10%, it will be treated as FDI. A committee will be setup to work out other details. Impact: Presently, the rules and compliance that govern FIIs and investments by such FIIs are different from those governing FDI inflows into domestic companies. This appears to be a clearly well-thought move. Simplified Procedure For Foreign Investors: SEBI will simplify the procedures and prescribe uniform registration and other norms for entry of foreign portfolio investors. SEBI will also converge the different KYC (Know Your Customer) norms and adopt a risk-based approach to KYC to make it easier for foreign investors like central banks, sovereign wealth funds, university funds and pension funds among others, to invest in India. Impact: In the very beginning…
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