During a stakeholders’ consultation meeting, chaired by Ashwini Vaishnaw, Minister for Railways, Information and Broadcasting, Electronics & Information Technology, film exhibitors and multiplex chains raised numerous key pain points of the industry which continues to grapple with challenges in achieving growth amidst evolving content distribution through streaming platforms and OTT services.
With over-the-top (OTT) streaming services controlling a healthy 87.8% of the digital universe, the competition between OTT and traditional movie theater chains continues to heat up. Theater owners are worried about more than just the lackluster content as viewers are increasingly turning to their couches for their entertainment needs.
Highlighting more on the issues before the Ministry, Kamal Gianchandani, CEO PVRINOX Pictures, shared how the screen density has been declining due to the lingering impacts of COVID-19, which severely affected business operations.
The high cost of real estate, even in smaller towns, poses another significant barrier. In addition to that, establishing movie theatres involves importing projectors and sound equipment from abroad since they are not manufactured domestically, thereby increasing operational costs.
Stakeholders are concerned over being charged at commercial rates while setting up multiplexes without compensation benefits.
Further, low discretionary power of spending of people also affecting the cinema theatres industry in maintaining viable operations across different urban and rural settings in India. Result of which Big cities are getting saturated whereas small cities are low in growth.
Suggesting the need for a proactive policy initiative for multiplexes aimed at boosting the industry, the stakeholders recommended expanding the lower tax slab from Rs 100 to Rs 200 to stimulate growth.
The current entertainment tax slabs are as follows: GST on tickets priced up to Rs 100 is 12% and GST on tickets priced above Rs 100 is 18%.
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Multiplexes also face challenges due to the lengthy process involving multiple NOCs, annual licensing, and various approvals, leading to significant delays.
The industry has proposed a streamlined approach with a single-window clearance for multiplex operations, emphasising that audits should not be a prerequisite for obtaining licenses.
To address the challenges of increasing screen density and overcoming infrastructural hurdles, it was suggested to streamline the procedures and minimise delays in obtaining clearances for cinema construction.
Simplifying these cumbersome processes will encourage the development of new cinema halls and multiplexes, ultimately enhancing the accessibility of quality entertainment for a broader audience.
“There is a need to promote ‘Ease of Doing Business’ in the sector, by reducing the number of locational clearances, and standardising the center and state rules and regulations,” remarked another stakeholder.
It is to be noted that there is a growing audience preference for diverse content experiences in cinemas, yet current regulations necessitate permissions for alternative activities. Simplifying this regulatory framework by implementing blanket approvals for such uses would be beneficial, suggested Gianchandani.
Stakeholders also suggested effective enforcement measures to combat piracy which poses a substantial threat to the cinema industry resulting in the loss of thousands of crores. It was further suggested that implementing a revenue share model with state governments to support multiplexes in small cities would contribute positively to addressing the screen density challenge.
Animation and VFX Sector
Mergers of big production and broadcasting companies have caused low growth of animation recently, according to industry members. Instead of big studios, small studios are now delivering VFX and animation services to international studios.
Ashish Kulkarni, Chair, FICCI AVGC-XR Forum, suggested a content reservation policy for kids’ content. 80% of such content should be produced domestically in India.
Initiatives to boost Indian content creation and intellectual property (IP) development were also proposed.
“Drafting of simplification of the process for AVGC companies to access tax credits and incentives to enable growth and innovation within the industry; creation of a framework to recognise IP with valuation as a collateral asset for seeking loans and other business requirements through a legitimate process and selective financial institutions,” it was suggested.
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Industry members recommended introducing a platform to manage IPs linked to bank accounts, aiming to position India as a global hub for IP Creators, and not just the back office of the world. Strengthening market distribution through the proposed IP platform, facilitating global outreach under the “Create in India for the World” initiative.
Vikas Kumar, CEO & Founder, DigiToonz, further recommended nurturing young talent and increasing university seats for this sector and suggested providing loan-based support to upgrade studio infrastructure.
Industry members highlighted that animation studios would benefit from rendering systems provided on a subsidy basis.
It was also suggested that animation studios should be offered interest-free loans for setting up studios. The industry recommended enabling these treaties for producers of exclusive Indian content.
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“The industry recommends strengthening regulatory systems to prevent exploitation. The standards of courses and curriculum at ITIs (DGT) should be improved to better prepare students for industry demands. If India and Japan can collaborate through production agreements, India can leverage Japan’s industry for significant advancements and success,” it was suggested.
Gaming stakeholders push for establishment of premium institutes
Gaming represents one of India’s largest and fastest-growing sectors, with a market size of $300 billion. However, there is a significant shortage of skilled talent in game design and development.
The industry urged the Ministry for the establishment of premium institutions similar to NID for gaming education and advocated for introducing gaming as an elective in engineering colleges across India.
It was recommended by the industry to streamline tax rebates to facilitate easier entry into the gaming sector.
Online gaming represents only 1% of the global market. According to industry, India should focus on increasing its presence as a producer and exporter of gaming content, particularly with Indian-themed gaming content, suggested Roland Landers, CEO, All India Gaming Federation.
To bolster the sector’s capabilities, industry members suggested bringing top-tier international gaming talent to establish labs and contribute to gaming education in India.