Do I&B sector FDI trends point to fading OTT buzz and deepening ad slump?

After two consecutive years of robust growth, foreign direct investment (FDI) inflows into India’s Information & Broadcasting (I&B) sector appear to be losing momentum. Official data shows that investments surged from ₹1,128 crore in FY22 to ₹7,012 crore in FY24, but have since eased to ₹6,007 crore in FY25.

The slowdown is more pronounced in the current financial year. Between January–March 2025 and April–June 2025, FDI inflows have dropped sharply from ₹1,221 crore to ₹552 crore- a decline of nearly 55%. 

Read e4m report on drop in FDI in I&B

This steep quarter-on-quarter fall has raised questions about whether the sector is entering a phase of correction after two years of expansion, or if global and domestic factors are dampening investor enthusiasm.

Industry watchers point out that the steep rise in FDI from FY22 to FY24 was largely driven by the streaming boom and content production wave that followed the pandemic years. The entry and consolidation of over-the-top (OTT) platforms, coupled with high demand for original programming, attracted substantial international capital into digital media ventures, production houses, and tech-driven entertainment start-ups. However, that initial momentum now appears to be tapering off. 

According to broadcast expert Rajiv Khattar, “The investments in the FY22 - FY24 period were on account of the industry seeing an onset of OTT platforms and there were considerable investments coming into OTT platforms and content productions. However, that period of the platforms has now cooled down as no new platforms are coming in, the big-ticket content production is also not happening – one, due to not much growth in the subscription numbers and secondly on account of the slowdown in the advertisement market. Overall, the investors are not getting much RoI in the sector and thus they are waiting and watching. We should keep in view that the last two years have been tough due to uncertainty in the global markets.”

The data aligns with this assessment. FY22 marked the early phase of renewed investor interest in digital entertainment following the pandemic, with inflows of ₹1,128 crore. By FY23, the number had jumped more than threefold to ₹3,745 crore, as global studios, streaming services, and technology investors looked to deepen their presence in India. 

FY24 witnessed a further leap to ₹7,012 crore, the highest in recent years, underscoring the sector’s appeal at a time when India’s digital content consumption and smartphone penetration were expanding rapidly.

But in FY25, the total FDI slipped to ₹6,007 crore, signalling that the surge may have peaked. The slowdown in the first quarter of FY26, with inflows dropping from ₹1,221 crore in Jan–March 2025 to ₹552 crore in Apr–Jun 2025, suggests a continuing moderation.

An industry observer explains that the sector may be entering a phase of consolidation.

“The earlier wave of FDI was driven by optimism around OTT growth and content creation. Now, with the market stabilizing and competition intensifying, investors are pausing to reassess their returns. Subscription growth has plateaued, ad spends are under pressure, and global investors are being more selective in committing fresh capital,” the observer said.

The industry expert added that domestic factors are influencing investor confidence. Advertising revenues, a major driver for both traditional and digital media companies, have been sluggish over the past year due to a combination of cautious corporate spending, fragmented audiences and competition from short-form platforms such as YouTube and Instagram Reels.

Despite these dips, there are areas of optimism. With the government promoting India as a global hub for media production and post-production services and with rising interest in regional and vernacular content, the sector could continue to attract selective but meaningful FDI in the coming years.

The increasing integration of artificial intelligence, gaming, and interactive formats into content ecosystems may also open new avenues for foreign partnerships.

However, for the momentum to sustain, industry voices stress the need for policy clarity and fiscal incentives. Simplifying investment norms, ensuring predictable content regulations, and fostering cross-border co-productions could help revive investor confidence, they said. 

In the short term, though, the sentiment appears cautious. 

The data for the first quarter of FY26 reflects that foreign investors are in a wait-and-watch mode, reassessing their exposure to a sector that has seen strong but uneven growth over the past few years.

The overall narrative is one of transition, from an investment rush driven by rapid digital expansion to a more mature, performance-driven phase. Whether this translates into renewed FDI inflows in the coming quarters will depend on how quickly the sector adapts to changing consumption patterns, global capital trends, and the evolving economics of media and entertainment in India.

According to the Department for Promotion of Industry and Internal Trade (DPIIT), cumulative FDI inflows into the I&B sector stood at Rs 76,143.29 crore as of June 2025, up modestly from Rs 75,590.84 crore at the end of March 2025 and Rs 74,369.17 crore at the end of December 2024.

These figures represent cumulative investments from April 2000 onwards, as tracked by DPIIT in its quarterly FDI fact sheets.

This means the I&B sector attracted Rs 552.45 crore in fresh FDI during the April–June 2025 quarter marking a 54.8% decline from the Rs 1,221.67 crore recorded in the January–March 2025 quarter.

While the slowdown could reflect cyclical corrections after a stronger start to the year, it also highlights how the I&B industry continues to attract a much smaller share of India’s total FDI pool compared to high-growth sectors like Telecommunications, Automobiles, and Computer Software & Hardware and others.

For context, as per the same DPIIT fact sheet, telecom services and computer software and hardware together accounted for more than 25% of cumulative FDI inflows since 2000. In contrast, the entire I&B segment including print, broadcasting, and online media represents less than 1% of total FDI inflows during the same period.

The automobile sector, meanwhile, continues to register strong interest from global OEMs and EV investors, drawing thousands of crores in quarterly inflows driven by localisation, component manufacturing, and electric vehicle ecosystem expansion.

Overall, the FDI climate, however, has remained resilient. Despite the I&B sector’s relative stagnation, India’s overall FDI landscape remains robust. Cumulative inflows from April 2000 to June 2025 crossed Rs 92 lakh crore, according to DPIIT’s Quarterly Fact Sheet (Updated up to June 2025).

During the first quarter of FY26 (April–June 2025), total FDI inflow (equity + reinvested earnings + other capital) stood at ₹2,22,120 crore, with equity inflows contributing ₹1,59,428 crore. The period also saw continued investor activity in technology services, manufacturing, and renewables, indicating sustained confidence in India’s long-term growth story.

Analysts suggest that the moderation in I&B inflows may reflect regulatory caution, ongoing consolidation in entertainment and broadcasting, and limited large-ticket deals. However, emerging opportunities in digital media, content streaming, and sports broadcasting could attract renewed investor interest later in the year, especially as policy frameworks around FDI in digital news and OTT platforms evolve.

As India’s advertising, media and entertainment industries continue to digitise rapidly, policymakers are expected to revisit investment norms to make the sector more attractive to global capital.