Consider this: Foreign direct investment (FDI) in the media and entertainment sector headed north in 2011-12, receiving Rs 32.54 billion during the fiscal. This was 72% more than the Rs 18.87 billion received in 2010-11. In 2010-11, FDI in the sector was Rs 23.40 billion.
In India, the media has been both powerful and dominating. As the government aims to increase India’s share in the global FDI space from 1.3% in 2007 to 5% by 2017, the media has its role cut out in projecting the face of an economy that continues to be growth-intensive, a country that has a growing and young labour force, rising adult literacy and per capita income, and talented human resources. All these factors motivate flow of foreign investments.
FDI in broadcast services
The government has decided to raise the FDI ceiling to 74% from 49% in broadcast carriage services. Indeed, it will be a booster to India’s cable TV sector. With the aim to completely digitize broadcast distribution in the next two years, raising the FDI ceiling in broadcast carriage services will not only bring in substantial transparency and accountability into the system, but will also initiate expansion of the media and entertainment sector, and in the process, add to the economy. According to an estimate, Rs 25,000 crore is required in investments by cable TV operators to digitize 100 million cable homes by 2014. The target is set for a complete digitization of India’s cable TV infrastructure by the end of December 2014; before that Delhi, Mumbai, Chennai and Kolkata will complete the task by October 31, 2012. Foreign majors will watch the metros’ digitization carefully so that they are at the ready to invest in the next phase.
Consolidation is also likely with mobile players stepping in for digital licences. On this front, the opening of 74% FDI in mobile TV is a welcome step, but more will be expected when the spectrum logjam is cleared and with 4G becoming a more clear and present reality.
Raising the FDI ceiling is good news for independent cable operators too, as they have an opportunity to consolidate and strengthen their base in an otherwise haphazard existence at present. The government has to ensure that foreign participation is further made seamless in order to build India’s own digital infrastructure and a base for new technologies.
FDI in Print
The government is likely to propose raising the FDI limit in the Print media to 49% from its present level of 26%. According to reports, the Information & Broadcasting (I&B) Ministry constituted committee, headed by I&B director Asha Swarup, has recommended the move. The panel is in the process of providing a roadmap to the government for policy initiatives in this regard. Unlike in broadcast carriage services, raising the FDI limit in Print media may not be as sound, transparent or beneficial to the industry.
By the government’s own estimates, the country has more than 78,000 registered newspapers, a majority of them vernaculars and significantly local. A road-map to further FDI in Print media, if brought into being, would only discourage the domestic, smaller aspirants. Worse, the existing local players will be at the mercy of mergers and acquisitions, and risk losing their autonomy and being obliterated by foreign media more driven by corporate interests.
According to Papa Rao of AP Herald, Naom Chomsky’s ‘Manufacturing Consent’ would be in full force, comprising a band of investors who would try to “generate consent for the mission set forth by their countries’ corporate and the political class”. This, in turn, Rao says, “would be dangerous for our native culture and the self-sustenance in the economy too”. Drawing a parallel to the Latin American ‘banana republics’ who have lost their sovereignty and are subservient to corporate interests, Rao says raising FDI limit in Print media would only expose native newspapers who may not be able to “cope up with the (foreign) competition and news content too”.
However, the report presented by the I&B committee is not without its merits. Although Indian Print media, unlike anywhere else in the world, has been able to withstand the extremities of the global financial crisis, it still awaits a point of “acceleration for achieving higher growth”. Indeed, as the committee said, innovation in the sector is the key, particularly in business models where the regional newspapers don’t have to fear the “big fish”, be it domestic or foreign ones.
Another pertinent issue is about India’s dire need of news agencies with global footprints, where a certain degree of consolidation is required within the home brands to be projected to the rest of the world. Foreign investments, in this context, can play a significant role in taking India abroad via its news.
FDI: The road ahead
The contribution of foreign investments in an emerging economy like India can never be undermined. Foreign investments have been a crucial gamechanger in projecting India overseas as a country of opportunities, in spite of its inherent challenges.
On the other hand, media in India – along with Print, TV and now, the Social Media – is here to stay. For us, the newspaper with the morning cup of tea is as much part of our daily routine as dal and roti/rice constitute our staple diet.
Admittedly, coming of news channels and Social Media have had an impact on Print media but it is not as if one is parasitic to another. At best, the segments complement each other.
In the case of FDI, under the present policy, newspapers and journals publishing scientific, technical, specialty journals can get 100% FDI. Foreign publishing houses, who own foreign newspapers, are also allowed to bring out a facsimile edition of the foreign newspaper through a wholly Indian-owned subsidiary.
Yet, keeping the ground realities in mind, the policies have to ensure a careful balancing act, to keep the national – and domestic – interests aloft. In my view, the I&B Ministry will be a real catalyst for social transformation by increasing FDI in news media, both Print and TV. I am all for FDI going to at least 49% if not 100% in this crucial sector, the fourth estate. Realistically.
Feedback: abatra@exchange4media.com
