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Entertainment industry set to double turnover by 2008: KPMG study

17-August-2004
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Entertainment industry set to double turnover by 2008: KPMG study

The highly unorganised entertainment industry in the country is set to become organised within the next five years. Its turnover is also expected to shoot up $9.4 billion by 2008, compared with $4.3 billion now, according to a study by KPMG and the Confederation of Indian Industry (CII). The report is likely to be released early next month.

“The entertainment industry in India is unorganised. We are coming out with a study with KPMG to assess the potential of the industry. The Indian media and entertainment industry — the prominent segments are films, television, and music — has grown in recent times. The industry is a major exporter of both finished products and services,” Gaurav Nanavati, chairman, CII, Western Region, said.

The entertainment industry has outperformed the rest of the economy in 2001. The sector logged an over 30 per cent growth, with a combined turnover of Rs 13,000 crore compared with Rs 10,000 crore in 2000. Key growth drivers were advertising spending and ticket sales. Exports of video films and software increased by 65 per cent to Rs 1200 crore in 2000-2001 (Rs 725 crore in 1999-2000).

“The entertainment industry was an emerging one and CII will try to ensure that Indian films find an adequate market abroad. There is an increasing demand for Indian movies abroad. We are even sending delegations to the Cannes Film Festival to promote Indian movies abroad,” said Marut Sen Gupta, regional director, western region, CII.

The Government in India is keen to sustain this growth and has positioned itself as a proactive facilitator, positioning India as a hub for the twenty-first century. It is removing barriers to foreign investment, fast tracking procedures and introducing legislation to control piracy and under-declaration. It has granted the film sector ‘industry’ status and has introduced ‘clean money’ through state controlled banks.

In 2001, film was accorded ‘industry’ status by the Indian Government thus making it eligible for film financing from banks and financial institutions while the Industrial Development Bank of India (IDBI) set up the country’s first film fund worth Rs 100 crore. The government fixed a ceiling of 60 per cent on entertainment tax. The film and cable industries have agreed to curb piracy of films.

Radio was privatised with 37 FM radio franchises awarded.

The Government has started to use regional and national tax incentives for improving building the production and exhibition infrastructure and to improve investment in content creation and human capital. The Government is also moving towards signing a number of co-production treaties to provide a framework within which private and public partnerships can flourish.

The Ernst and Young - FICCI Report on “The Indian Entertainment Industry: Emerging Trends and Opportunities” was recently released at Frames 2004, Asia’s largest convention on the business of entertainment, which provides an insight into the current trends and the future outlook of the Indian film, television, radio and music industries.

According to a report of The UK Film Council, the council could be the model, India needs for using public funds to develop a sustainable film industry. Both the CII and the Minister for Information and Broadcasting have expressed interest in this idea. There is a real opportunity for ‘creative partnership’ for both film and television. The UK Film Council could, for example, create a script development workshop bringing UK and Indian writers together to develop stories that can work for both the UK and Indian markets. With the right stories there is the potential of making crossover movies.

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