The standing committee of Parliament on information technology has rejected foreign direct investment in print media dealing with news and current affairs saying it “is not in the long-term interest of the country”.
The committee has, instead, said that the government should consider putting in place an institutional arrangement for concessional finance for small and medium newspapers.
The panel, led by Lok Sabha MP Somnath Chatterjee, has sought to put the debate of allowing minority foreign shareholding at rest by accepting the opinion of the law, justice and company affairs ministry that a foreign investor, even with a minority shareholding, can gain effective control of the management and editorial board through the shareholders’ agreement or terms of a loan extended by him.
Dwelling on a representation made by five publishing houses for greater access to capital by allowing investment by foreign institutional investors, the committee has said that “the print media has a larger dimension than a mere profit making venture.”
For that very reason, the perceived advantages of foreign institutional investment over foreign direct investment or vice-versa are not a relevant consideration,” the report says.
The committee has also stressed the need for a comprehensive print media policy saying that the 1955 Cabinet resolution, is “an inadequate basis for such a policy in the new situation”.
The committee, however, has found publication of foreign scientific and technical magazines to be acceptable in collaboration with Indian publishers, which would benefit students of science and technology and the scientific community to collaborate with their international counterparts.
The committee is expected to submit its report to Parliament in the Winter session beginning November 19.
The issue of allowing FDI in print media had cropped up in February this year when Reserve Bank of India (RBI) had to amend the Foreign Exchange Management Act (FEMA) to prevent NRI/OCB investments in print media in the wake of the Rs 50 crore Mid-Day Multimedia IPO (Initial Public Offering) falling foul of the 1955 Cabinet resolution.