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Watch: Why new FDI rules for digital media companies are regressive for the internet space in India

On August 28, the government of India decided to “permit” 26% FDI under the government route in digital media companies that upload or stream news and current affairs. Nikhil Pahwa, MediaNama’s founder and editor, however found it "not clarification" or "an opening up", but "a restriction on funding". "It is regressive for the internet space in India," he said. Earlier, he clarified, digital media companies could raise funding without any restrictions. Thus, effectively, FDI has gone down from 100% to 26% - meaning that what is being passed of as “permission” is actually a restriction and a cap. Here are the key issues around this move: It will increase red tape: Pahwa said that this funding can only be approved by the government, and thus, essentially an increase in red tape. Under earlier guidelines, restriction on raising FDI were placed only on sectors that were namechecked; every other sector was under an automatic route. “If you’re an e-commerce marketplace, you can raise funding; if you are a software service, you can raise funding, but if you’re an online media company, then there is a restriction,” he explained. https://www.youtube.com/watch?v=EInjF1lZozg So, is the government looking to increase control over digital media? Yes. Pahwa explained that under the new guidelines, the government talks of 49% FDI for DTH and then talks about 26% FDI in digital in line with print media. “So, what’s the point of mentioning DTH?” he asked. He highlighted that today, when more people are consuming media and the economy is opening…

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