The importance of sectoral champions within government

On March 10, the Ministry of Information and Broadcasting (MIB) clarified that the foreign direct investment (FDI) cap of 26 per cent on digital news media, will not apply to OTT platforms streaming TV news channels. The MIB press release further informs that TV News Channels are already “granted permission under the Uplinking and Downlinking Guidelines, 2022 of the MIB, and “their entities providing the digital news content are already covered by the FDI policy”.

Though it comes four years after the Department for Promotion of Industry and Internal Trade (DPIIT) announced the FDI cap, the ministry’s decision is a welcome move. In the absence of such clarification, a streaming platform would’ve had to get a licence to stream news channels on its platforms – an unnecessary regulatory burden.

TV News: A heavily-regulated sector

Indeed, TV news channels are under a very wide regulatory and legal umbrella and don’t need further regulation. Some of the additional laws that govern them include the Cable Television Networks (CTN) (Regulation) Act, 1995, and the Indian Penal Code. There are also layers of self-regulation by the News Broadcasters Standards Authority (NBSA), the Advertising Standards Council of India (ASCI) and the Indian Broadcasting Federation that act like watchdogs for TV channels.

The Programme Code under the CTN Act places even stringent regulatory checks on TV channel content. It stipulates that content which “offends good taste and decency,” “contains criticism of friendly countries,” “encourages superstition” and “contains anything obscene,” should not be aired.

By issuing the March 10 clarification, the MIB has indicated that it is ready to remove anomalies that plague the broadcasting sector. It would do well to also devote some attention to remove the contradiction between the FDI cap in the news broadcasting segment and the uplinking/downlinking guidelines for TV news channels, issued in 2022. Amended in 2015, the former stipulates that foreign investors can invest up to 49 percent in news channels. However, the latter requires that the single largest Indian shareholder of a news channel should have at least 51 per cent of the total equity. These caps are hard to reconcile for listed media companies that are mandated to float a minimum of 25 percent of their shares to the public, as per Securities Exchange Board of India regulations. Therefore, no foreign investor has taken a substantial position in any listed Indian news businesses.

A two-step reform will help remove this anomaly. First, the uplinking/downlinking guidelines should do away with the requirement that an Indian must hold 51 percent of the total equity in a news channel. Second, FDI in news should be increased to 100 percent. Of this, 49 percent of the investment can come in via the automatic route.

FDI in E-Commerce: Clarion call for clarity

Prior to last week’s announcement there was complete uncertainty over the application of FDI norms on digital media. A similar clarification would also be welcome for the e-commerce sector. E-commerce is defined widely as “buying and selling of goods and services including digital product over digital and electronic network” under extant FDI Policy. As a result, the rules accompanying the Policy are technically applicable to almost every online transaction – a sure shot recipe for disaster.

For instance, one of the rules says that e-commerce entities should not directly or indirectly influence the sale price of goods and services on their marketplace. As things stand, such a rule is applicable on platforms like Urban Company which offer utility services at standardised pricing. Imagine if the platform had to check with every electrician before listing the price of his/her services. Rigid application of these rules would make it impossible for Urban Company to function and discourage other platforms too that want to offer services at standardised prices.

Sector-specific ministries still relevant

The appropriate ministry to issue a narrow definition of e-commerce would the Ministry of Electronics and Information Technology (MeitY) which administers the Information Technology Act. The law, enacted in 2000, was passed to give legal sanctity to online commercial transactions.

In this context, the administrative allocation of e-commerce to the DPIIT in 2018 results in taking the issue out of its natural home i.e. MeitY. As a result, there isn’t a specialised government body that can advocate for changes to the FDI policy in e-commerce. Those who can do so are within the DPIIT itself – which oversees FDI rules for all inward investments, and not just for e-commerce. In contrast, an important reason behind the government issuing the March 10 clarification is the MIB, which itself is a stakeholder in the issue. It likely engaged with the DPIIT and was able to advocate its position effectively.

The MIB’s March 10 clarification also demonstrates the relevance of sectoral ministries. With digital technologies disrupting sectors across the board, it has become fashionable to predict the demise of ministries that oversee legacy sectors like broadcasting. However, the MIB has demonstrated that it is not only relevant but also effective in affecting important policy changes.

The real question that needs to be answered is this: who will bat for sectors who do not have an overseeing ministry? Will government stakeholders understand their plight? Or will they be left to fend for themselves?

(The views expressed here are solely those of the authors and do not in any way represent the views of exchange4media.com)