Why in News?

• The Ministry of Information and Broadcasting in India has clarified that over-the-top (OTT) platforms, such as Netflix and Amazon Prime Video, can stream digital feeds of TV news channels, even if they have 100% foreign direct investment (FDI).

About the News:

• Such OTT platforms would not be bound by FDI norms (currently, there is an FDI limit of 26% in digital media).
• In November 2020, the government asked all news websites, portals, and aggregators to comply with the 26% FDI rule.

What are OTT platforms?

• An over-the-top media service is a media service offered directly to viewers via the Internet.
• OTT bypasses cable, broadcast, and satellite television platforms: the types of companies that have traditionally acted as controllers or distributors of such content.

What is FDI?

• Foreign direct investment (FDI) is when a company takes controlling ownership in a business entity in another country.
• With FDI, foreign companies are directly involved with day-to-day operations in the other country.
• This means they aren’t just bringing money with them, but also knowledge, skills and technology.
• Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets, including establishing ownership or controlling interest in a foreign company.

Where is FDI made?

• Foreign Direct Investments are commonly made in open economies that have skilled workforce and growth prospect.
• FDIs not only bring money with them but also skills, technology and knowledge.

Routes through which India gets FDI:

Automatic Route:

• The non-resident or Indian company does not require prior nod of the RBI or government of India for FDI.
• Foreign Investment is allowed under the automatic route without prior approval of the Government or the Reserve Bank of India, in all activities/ sectors as specified in the Regulation 16 of FEMA 20 (R).

Government Route:

• The government’s prior approval is mandatory. The company will have to file an application through Foreign Investment Facilitation Portal, which facilitates single-window clearance.
• The application is then forwarded to the respective ministry, which will approve/reject the application in consultation with the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce.
• DPIIT will issue the Standard Operating Procedure (SOP) for processing of applications under the existing FDI policy.