After the Indian government introduced a cap of 26% on Foreign Direct Investment (FDI) in digital media platforms on August 28, a number of articles have thrown light on the shortcomings of the move, calling it “restrictive”, “regressive” and “confusing”.

However, on September 5, an article in the Times of India informed us that digital media bodies have “welcomed” the move, especially “digital news entities that upload/stream news and current affairs, on the lines of the print news media.”

The core argument of the piece seems to be that news aggregators like DailyHunt, Opera News and UCNews manage to reach an audience that print media companies do not. Their reach is aided by humongous Chinese investments, says the article. Since the FDI cap of 26% had been allowed in print media since 2002, a similar cap on digital media will create “level-playing field” between the two mediums. 

“They (news aggregators) are increasingly focused on hyperlocal content coverage, aiming to create or source content for small towns in India, and in regional languages. In this way, aggregators directly compete with local and national publishers, driving the need for parity in FDI limits,” the article argued.

The article also quoted Mr. Pawan Agarwal, chairman of the Digital News Publishers’ Association (DNPA): “The government’s decision to cap FDI at 26% for digital news media will provide a level playing field for Indian news publishers and the news aggregators.”

When contacted, Agarwal told Newslaundry that DNPA consists of 10 members: Eenadu, India Today Group, Jagran New Media, NDTV, Amar Ujala, Dainik Bhaskar, Indian Express, Malayala Manorama, Times Internet, Hindustan Times.

None of the ten members of the DNPA are digital media-only entities. Rather, all of them are established media companies with significant print and broadcast presence and an additional digital arm. However, Agarwal told Newslaundry that DNPA’s “membership charter includes digital only media organisations as part of the association.”

On the latest FDI cap, Agarwal had this to say: “There was no policy on FDI in digital media. It was unregulated. The policy currently seems to favour made-in-India digital brands but we are waiting to see details as they have not been shared yet. We are very open as a group to engage with the ministry on finer points of the policy as there are many open items.”

On the day the government announced the policy, Union Minister for Information and Broadcasting Prakash Javdekar claimed that the logic of the move was that “our media is not overtaken by foreigners”. He added that the policy was put in place because of the media’s demand.

So where did the demand come from? When asked whether he had met the I&B minister, Agarwal said that “members of DNPA have not met the I&B Minister so far.” 

And did DNPA consult digital-only media outlets? “We look forward to the ministry engaging with us and other stakeholders etc,”  Agarwal told Newslaundry. 

According to Vignesh Vellore, co-founder and CEO of Bangalore-based The News Minute, this argument does not consider the scenario faced by digital news entities that create their own content and do not aggregate them.

“The problem with that argument is that you’re talking about aggregators who have distribution of about 200 million. That’s a very large number when compared to distribution at other websites. So does this mean that smaller websites like mine which do not have that big a traffic are exempted? It’s not very clear.

I asked Vellore whether the “level playing field” argument is as good as it sounds. “Absolutely not,” he says. “The legacy media, which has been print-dominated for a long time, has been given a lot over many years. Be it subsidies or advertising revenue. Unlike the rest of the world, print media is actually doing well in India. But in the digital space, there is still no proper revenue model and there is a lack of funds. So you’re essentially leveling the same regulation on large and small players. I don’t agree with this.”

According to Medianama co-founder, Nikhil Pahwa, print media outlets are welcoming the government move because it restricts the competition they face from digital news entities. 

Pahwa said: “The Digital News Publishers Association (DNPA), which has ten organisations under it, all of which are basically the online arms of print companies, they are rejoicing because their competition is being restricted.”

He added that the celebration was redolent of the “old, illiberal, pre-liberalisation setup” that once operated in India. “It is like frogs in a well: someone’s doing better and trying to get out of it because they have more freedom and you pull them back in. To me this is a regressive mentality. They are trying to create an environment of red tape.”

Prabir Purkayastha, Founder and Editor-in-Chief of Delhi-based Newsclick.in, told Newslaundry it can be argued that the government’s introduction of a 26% cap is “essentially to control digital news platforms, and not digital media per se.” 

“If you regulate print, radio and television news, then you already have a position regarding news. Using that on digital media per se cannot be an argument. Either you make it uniform or you don’t. So that’s not the issue I have,” Purkayastha said. 

When we mentioned the level-playing field argument, Purkayastha laughed and said it is actually the reason for print media outlets to welcome the FDI cap, and not the digital media ones.

However, Purkayashtha believes that this is not the larger issue. “No government likes criticism. But the media should be doing its job. In the current climate we have media houses that are docile and reluctant to speak truth to power. They rather speak power to the opposition. That needs to go.”

Since the policy’s announcement, there are questions that the government has left unanswered. For instance, what is the entry barrier for those who will manage to get away and yet compete in the market? Will the government chase competing American news companies like The New York Times for falling outside the ambit of Indian rules?  

Digital news platforms have sprung up in the Indian internet landscape only in the last decade. They’ve had a short life compared to the print media companies which have consolidated a powerful presence over several decades. In this context, the parity argument is not convincing because it essentially prescribes the same diet to both a sturdy veteran and a sensitive newborn. Moreover, given how the state exploits the structural pressure points of print and broadcast media, are digital media bodies like DNPA advocating that digital-only media entities come within the same fold? We can only hope that such a sinister sentiment is absent, because its presence would indicate support for a wizened and compromised news ecosystem that squeezes any space available for alternative ecosystems to flourish. 

With calls of ‘minimum government, maximum governance’ from the Centre in the recent years, one would expect the Indian government to actually pack its bags and exit from businesses rather than weilding a bureaucratic stick at them.

We sent questionnaires to Tanmay Maheshwari (Director, Amar Ujala Publications), Bharat Gupta (CEO, Jagran New Media), Puneet Gupta (CEO, Times Internet), Prabhakar Singh (Revenue Head, HT Digital Streams), Suparna Singh (NDTV group). The piece will be updated as and when they respond.