In a landmark policy decision, compelling enough to change the print mediascape forever, Government has announced ‘partial modification’ of 1955 cabinet decision to allow ‘26% FDI in Indian entities publishing newspapers/ periodicals dealing with News and Current affairs.’ The decision will give fillip to several English and Regional publications, waiting for funds to take on near monopolies in publishing. Print body, INS however maintains its view that ‘FDI will compromise national interest.’
As reported, Cabinet was scheduled to discuss the issue yesterday (25/06). The news of Cabinet approval was first flashed by exchange4media in the afternoon. The official Press Note issued by I&B said – “A comprehensive review of the whole matter has been carried out now…. The policy now would provide for dealing 26% FDI in Indian entities publishing newspapers/ periodicals dealing with news and current affairs, after suitable verifications by central government and the editorial and management control remaining fully in Indian hands.” This in effect opens door for Indian media houses seeking foreign investments to upgrade their infrastructure and compete with large near-monopolistic competition. Government also allowed upto 74% equity investment in Indian editions of foreign owned technical journals and specialty ‘non news’ magazines.
While the logic of allowing FDI, 49 years after it was invoked, is clear to most media analysts, the aggressive lobbying by large vested interest groups proved too mighty for reason. To her credit, Minister has taken on this and several cantankerous issues like DTH and CAS with total conviction.
Interestingly, Indian Newspaper Society (INS) reiterated its stance opposing the decision. Citing unconvincing arguments like ‘threat to national interest’, ‘invaluable contribution to the freedom struggle’ and ‘FDI will jeopardize harmonious relationship among the different communities’ to defend its anti-FDI rhetoric, it choose to distance itself from the decision. “It is a matter of surprise and consternation that the Government have overlooked the recommendation of Parliamentary Standing Committee on IT headed by Somnath Chatterjee and allowed entry of FDI in print,” said a disillusioned INS President Pratap Pawar.
While the print body was circumspect, Confederation of Indian Industry (CII) lauded the Government’s decision. “Allowing FDI is a bold and significant step. This is a positive first step. It will take a year to stabilize. After discussions with major publications, CII had made a recommendation to Ministry,” remarked Biren Ghose, member of CII sub committee on Entertainment. CII believes that this decision will ease access to funds, and foster competition.
At many print organization, notably India Today, Indian Express, Mid-Day, Dainik Jagran and Business Standard, the mood is upbeat. Others like Bharat Kapadia are cautious, “There is a plus as well as a minus. Right-minded investors can improve the knowledge base and technology. But this critical medium in wrong hands can also cause serious problems.” Government, on its part, has however taken a few precautions to prevent misuse. For one, the editorial and management control should remain ‘fully’ in Indian hands. Also the approval to allow FDI is on a case-to-case basis giving government time to review each proposal. To avoid effective management control by foreign players holding 26%, government has stipulated that the largest Indian shareholder should have ‘substantially’ higher holding. Detractors argue that these clauses leave much to the interpretation and can lead to slow decisions.
Dissent and brickbats aside, the Cabinet decision will set the tone for the new print media environment. More resources facilitating content generation, marketing, HR and international best practices…. With barely 10 hours for the announcement, TN Ninan, Editor, Business Standard, has informed that Financial Times is keen to acquire stake in BS! With much action ahead, keep watching this space.