With more than 600 television channels, 100 million pay TV households, 70,000 newspapers and 1,000 films produced annually, India’s vibrant media and entertainment (M&E) industry provides attractive growth opportunities for global corporations. In recent years, with near double-digit annual growth and a fast-growing middle class, there has been a renewed surge in investments into the country by multinational companies.

At present, India has probably one of the most liberal investment regimes amongst the emerging economies with a conducive foreign direct investment (FDI) environment. The M&E industry has significantly benefited from this liberal regime and most sectors of the M&E industry today allow foreign investment. The government (GOI) has recently further liberalised the FDI caps in key sectors (including Direct-To-Home (DTH), print media and radio) and entry restrictions for foreign companies have been relaxed for most segments of the M&E industry.

In the year 2001, the film industry was granted the status of an 'industry'1. Since then, the GOI has taken several initiatives to liberalise the foreign policy regulations relating to films. Through the liberalisation of the foreign exchange regulations, the GOI has allowed 100 percent FDI in the film sector. For the purposes of FDI, film sector broadly covers film production, exhibition and distribution, including related services and products. FDI in the sector is permitted without any prior approval (‘automatic route’). In addition, there are no entry level conditions for FDI in the sector. However, investors must comply with certain post filing requirements, including notifying the Reserve Bank of India within 30 days of receipt of inward remittance in India and filing of certain documents within 30 days of allotment of shares.

The GOI has also entered into film co-production treaties with several countries2 and is in the process of entering into more bilateral pacts with countries like Australia, China and Canada.

Entry routes:        

Foreign investments are permitted in an Indian company either after obtaining approval from the Indian Foreign Investment Promotion Board (approval route) or freely (automatic route). As a thumb rule, unless sectoral restrictions/caps have been provided under the Indian foreign exchange regulations, 100% foreign investment may be made in an Indian entity under the automatic route. However, even under the automatic route the foreign investor is required to fulfil certain procedural compliances, such as the valuation at which the shares of the Indian company can be transferred/issued need to be met. Set out below, is a brief outlook of the sectoral restrictions for foreign investment in the M&E industry:

Click here to view table.

International film studios such as Warner Bros., Disney, Fox and DreamWorks have collaborated with local film production houses to develop Hindi and regional films. Some recent investments in the M&E industry by global players includes3:

  • US based investment firm Tiger Global Management LLC has acquired a 25 per cent stake in 'The Viral Fever' (TVF), an online video content creator, for US$ 10 million.
  • Balaji Telefilms Limited has raised Rs 150.08 crore (US$ 22.09 million) through allotment of equity shares on preferential basis to catapult the launch and growth of ALT Digital Media, a Business-to-Consumer digital content business segment of Balaji Group.
  • Reliance Entertainment (owned by Mr Anil Ambani) and DreamWorks (led by Mr Steven Spielberg), along with Participant Media (led by Mr Jeff Skoll) and Entertainment One (eOne) have formed a new film, television and digital content creation company called ‘Amblin Partners’, and have raised US$ 500 million in debt to develop and produce films.
  • Walt Disney, who earlier held a 50% stake in UTV, has now acquired a controlling stake in UTV Software Communications.