Business

The Indian Film Industry is Missing Out On ‘Make In India’

Countries such as Malaysia are winning business at India’s expense, resulting in lost revenue, accolades, profits and taxes.

Credit: http://blog.lareviewofbooks.org/chinablog/india-china/

Is it not high time to analyse why Indian filmmakers prefer to shoot abroad and why foreign filmmakers are so loathe to shoot here? Credit: http://blog.lareviewofbooks.org/chinablog/india-china/

While Indian film makers fight a seemingly quixotic battle against the Central Board of Film Certification, which seems intent on providing sanitising cuts instead of certification, Hollywood films have begun to make a serious impact on domestic films at the Indian box office. Perhaps it is time to take an urgent look outward as well as inward if the country is not to lose out to a double whammy of foreign imports hurting the film economy and domestic films being too tame for the international palette.

Was the writing on the wall first visible when ​Slumdog Millionaire became a global success? Funded by Camelot UK, the original IP owners of Kaun Banega Crorepati, the movie was entirely shot in India yet the country received no revenue from the $1 billion that the film generated from the global box office. We simply provided services but no added value that could have entitled us to a share of the international pie.

​Despite being the largest film-making country in the world, Bollywood is actually stagnating. Factoring in inflation, annual growth is in low single digits whereas films like Hollywood’s Jungle Book topped Rs 135 crore in the Indian box office takings, vanquishing the domestic SRK-starrer Fan’s Rs 70 crore. Sony’s Angry Birds opened on a poor weekend but still generated Rs 9.5 crore over three days which was more than the total of three small domestic films Veerappan, Phobia and Waiting.

Is it not high time to analyse why India is failing on two fronts: why it’s own filmmakers prefer to shoot abroad and why foreign filmmakers are so loathe to shoot here? And with Bollywood contracting, why are we not doing more to reverse these dangerous trends and attract the Hollywood makers of television shows such as Homeland and Indian Summers to our country instead of letting South Africa and Malaysia take away business to which we have cultural claims?

Part of the reason that India remains a country “to avoid shooting in” is that other countries offer producers rebates of 30-40% whereas India offers a number of disincentives. For instance, foreign film-makers are surcharged by a factor of 200% to 300% as separate pay scales and rentals apply. Furthermore, getting permissions will involve the information and broadcast ministry’s approval of foreign scripts when the same does not apply to local film producers (until of course it can hurt the most, i.e. during the certification or rather censorship process). Further permissions will be required from numerous departments in each state like the Bombay Municipal Corporation, port trusts, Architectural Society of India, the railways, traffic police, and local bodies such as temples, political wards and the like all of which involve conversations that are brokered by location managers; often involving under-the-table inducements in order not to ensure that permissions will be granted in a timely manner. Who needs that when film making is seen elsewhere as something to be won and then facilitated with red carpets rolled out for brave financiers, producers and directors with a story to tell?

It is true that when so much black money still goes into India’s domestic film industries, the government is rightly not ready to rebate local film makers. However, when the country’s movie industry is clearly losing out to other countries, a clear-cut strategy needs to be actioned.

If India is to become a centre for international film-making, it needs to compete with other countries that incentivise film makers and help them complete their arduous work. International rebate systems such as the UK’s and Canada’s, and most others, are cleverly constructed to provide the host country’s producer with an incentive to offer his foreign collaborator in return for an equity share in the film or television series. If India does not quickly institute a similar rebate system to attract film-makers here, it will continue to see an outflow of ideas and further erosion in the film industry’s GDP.

Take the UK for example, which only represents around 7% of the world market for international film sales. India is around half of that but unlike the UK, the rate at which international films are being consumed here may soon overtake the UK and make the country a more important target for Hollywood and international independents. Now see how much Hollywood spends in the UK making its films: over $1.2 Billion annually, whereas in India it spends not even one percent of that. The same hunger to compete as the UK might wean India off its unhealthy dependence on Bollywood and focus its film-makers on a greater participation in the global film industry so that a share of the spoils can be repatriated here.

The following steps could have a direct positive economic impact that would mutually benefit India and foreign film-makers.

Firstly, institute a production rebate system for foreign exchange funded films (“FEFFs”) in return for an equity share for the Indian co-producer in such FEFFs to the extent that these FEFFS are shot in India, thereby bringing a share of world net revenue back into the Indian tax net. An example of this is Sir Richard Attenborough’s “Gandhi” where even today six-monthly remittances are made to the Indian government by the film’s revenue collectors abroad. In today’s world, the central government would be investing in such FEFFs by refunding a proportion of the costs spent in India with converted foreign currency. The local executive producer facilitating such a refund would be in a position to command a share of the film’s profits; this is how it works in the UK, Canada, where the benefits of such schemes have been analysed and proven. 

Secondly, institute a level playing field by removing the inflated costs that are charged to international producers currently, deterring them from coming here. This would require to be adhered to by all Indian film unions. The culture of surcharging the foreigner by a factor of 200-300% or more stems from an outmoded throwback to when air tickets and hotel rooms would cost foreign visitors more than locals and has no place in a competitive environment in the 21st century.

Thirdly, empower the Film Facilitation Office currently being set up in Delhi to deal with script approvals by qualified script readers and the granting of state-wide permissions in as painless a manner as possible. This already has government approval and is being actioned.

Lastly, our own house must be put in order. India’s soft power abroad as a bastion of democracy should not be eroded by an infantilising certification process. International partners will be looking to make mature films. They would want to make even hard-hitting ones with Indian partners, who do not have to be embarrassed by the yardstick being currently used to make cuts instead of issuing a film with a certificate that informs its audience of the choice it and not the CBFC gets to make – to see what it wishes to see.

Enough work has been done in India on film treaties that have been ignored, because they do not address the practical problems producers face. Other countries like Malaysia  are winning business at India’s expense, resulting in lost revenue, accolades, profits and taxes. Let us have ‘Make in India’ and not have film-makers even think about ‘Faking India’ elsewhere.

Santosh Mehrotra is Professor of Economics, JNU. With inputs from Michael E. Ward, Producer, Kreo Films, UAE.