Complicated tax regime stunted Indian film industry, says report

Complicated tax regime, slow growth in average ticket price (ATP) and low infrastructure penetration are among the main reasons why the gross realisation of the Indian film industry was consistently lower than its global counterparts, Deloitte Indywood Indian Film Industry (IFI) report noted.

The report by the consulting major Deloitte Haskins was released at the ongoing Indywood Film Carnival-2016 being held at the Ramoji Film City here on Sunday, by Sohan Roy and Shyam Kurup representing Indywood and Ashesh Jani and Prashant Bhojwani on behalf of Deloitte Haskins.

The focus on the IFI and the challenges it faced was primarily because the industry's gross realisation was substantially lower than its global counterparts. Box office realisation in the United States and Canada is estimated at US$ 11 billion, even while just about 700 films are produced in these countries.

In sharp contrast, IFI produced anywhere between 1,500 to 2,000 films a year in over 20 languages and only grosses about US $2.1 billion. Compounded annual growth rate (CAGR) is put at 11 per cent and is said to reach US$ 3.7 billion by the year 2020.

Despite the double-digit growth rate, problems plaguing the IFI include rising costs and lack of access to funding, piracy, multiple layers of bureaucracy and the prevailing censorship norms that are very strict, the report cites.

Going forward, the industry needed to focus on promoting film tourism, skill development, shortening the window of release through enhanced planning, updating technology, countering piracy and ensuring growth of multiplexes.

The key drivers for the IFI, the report said, are increasing per capita income and the growing middle classes, rising demand from Tier 2 and Tier 3 cities, diversification into international markets, leveraging the potential of digitization, promoting ancillary revenue streams and use of visual effects in production.