Odd that govt shouldn't hike FDI in newspapers beyond 26%
In the pre-internet days, if the government felt foreign newspapers were giving India a bad name—this was generally interpreted as questioning government policy!—all that it needed was to not give permission to be published from India; subscribing to the NYT, say, was always possible but it would arrive a few days late and the costs were prohibitive. None of this, needless to say, is possible today with every newspaper available on the internet and foreign television channels allowed to beam into India anyway. Which is why, it made perfect sense, as has been done in most sectors—including the erstwhile holy cow called the defence sector—to allow foreign direct investment in the media also. Apart from the fact that this would provide more competition, it would also provide more capital to smaller fund-starved Indian media which would lead to greater professionalisation and higher standards—news agency PTI has reported the government has turned down the proposal to hike FDI levels in the print media. Naturally, as in all sectors where FDI has been allowed, the equivalent of the Bombay Club opposed it and got the government to start talking of inserting clauses like ‘Indian control’, ‘Indian editors’ and suchlike even when limited FDI was to be allowed. Why this clause should apply to the media was never clear, and it is fallacious to assume that foreign newspapers will criticise the government while locally-owned ones won’t. Ironically, the government now allows 100% FDI, after approval, in the defence sector that the media loves to be bracketed with as being sensitive and, therefore, an area where foreign investment should not be allowed, or allowed with strict controls.
The big boys of the newspaper world had their way, so when the government liberalised the rest of the media sector, FDI levels in print media remained at 26%. While 100% FDI was allowed through the automatic route in television broadcast carriage services, it was raised to 49% in television news—in the case of TV news, was more equity not allowed because this could result in a situation where the editor was not ‘mentally fully Indian’? Even this limited window for newspapers, though, got some investors interested and there is some investment in a few newspapers. But the idea behind FDI is to change the nature of the game locally. So, FDI is meant to augment the resources available to local companies, not just in terms of cash but also in terms of technology; an immediate consequence is greater competition in the local market that benefits the entire industry, and that is precisely what has happened in sectors from steel to automobiles where FDI limits have been relaxed. Another aim, once the foreign player becomes big here, is to encourage them to offshore more work to India—that is what the prime minister hoped for when he decided to actively solicit players like Foxconn to manufacture mobile phones in India. Given all this, it is not clear why newspapers have been singled out for such treatment, or is it that the big boys of the newspaper industry wield so much clout that they manage to dictate government policy?