Hollywood is increasingly knocking at the doors of Indian animation studios, but the industry is suffering from high tax rates, dearth of talent and lack of international focus
Indian animation studios are doing a lot of work for Hollywood productions. But why is the Indian animation industry not making any kind of a mark on the international front? Despite great opportunities at hand, the industry continues to remain the back-office of the world as far as animation is concerned.
In India, although several animated films were to be released in 2009, they didn’t make it to the screens because of limited screen space and lowered risk appetite of production studios. Pre- and post-production animation work is mostly driven out of US and Europe, but the script-to-screen journey with a ‘Made in India’ stamp may just take a little longer.
P Jayakumar, CEO, Toonz Animation India, spoke on some bottlenecks which are hampering the growth of the industry. He told Moneylife, “Primarily, the domestic market is a growing one and as such is not established. There is apprehension about how people would take to a particular animated movie, which deters investors. Secondly, lack of skilled animation professionals impacts quality in-house productions. Animation institutions currently produce software professionals who can use the tools of animation, but are not creatively-inclined individuals who understand the nuances of animation from script-to-screen (production).”
Jehil Thakkar, executive director, media and entertainment, KPMG echoed the same views, “We are not equipped to make an end-to-end product. We won’t be able to make another Toy Story.”
Apparently, outdated animation content is literally dumped on Indian networks as there are no potential buyers for domestic content in India. Mr Jayakumar added, “As a growing industry and in the backdrop of a growing market, the emphasis is on producing movies that base themselves on familiar themes—and mythology is an area where the focus is. This may not suit the international market where a general theme may work well.”
The government is doing its bit, but taxation is also killing the industry. The ministry of information and broadcasting is looking at making it mandatory for all children’s channels to telecast local animated movies on a daily basis during specific slots.
However, the entertainment tax rate—which is different from state to state—varies from 20% to 40%. If you look at Asia, entertainment tax is almost 3% in Japan and Singapore; 7% in Thailand and zero in Hong Kong.
The Federation of Indian Chambers of Commerce and Industry (FICCI) has requested the government for an exemption of entertainment tax on all animation feature films and movies meant for children. Mr Thakkar explained, “I think the waiver is warranted to improve this industry. This will surely help in raising the standards (of the animation industry) across all media platforms.”
The animation and visual effects segment of the entertainment industry registered a growth of 13.6% in 2009 and is expected to grow at a CAGR (Compounded Annual Growth Rate) of 18.7% in the years to come to attain Rs4,660 crore by 2014.
Most of the business will depend on outsourced work and co-production deals. But the fact remains that US studios are falling back on Indian talent. According to media reports, companies like Fox, Walt Disney and Warner Bros are using domestic talent to produce Indian-language films. India sold more than 3.2 billion movie tickets in 2009, which amounts to more than double that of the box-office sales in the US and Canada combined, in terms of number of tickets sold. Mr Jayakumar added, “To sum up, I think it’s not too far when we will see Indian studios churning out animated content for the international market.”
Barring food grains and handicrafts, all other sectors such as textiles, gems and jewellery and marine products performed well in the month under review
The economic crisis-worn exports sector posted a staggering 36.2% growth in April to $16.9 billion, but the government tempered the euphoria saying growth appeared large due to last year's poor showing, reports PTI.
Exports had shrunk nearly 30% to $12.4 billion in April 2009, in line with a 9% contraction in global trade as a result of the worldwide financial crisis.
India's exports contracted for 13 straight months starting October 2008, before turning positive in November 2009.
Barring food grains and handicrafts, all other sectors such as textiles, gems and jewellery and marine products performed well in the month under review.
"Don't get carried away by these numbers... because base was low and that's why you have an increase in percentage terms. You are still running below the export level in April 2008-09," commerce secretary Rahul Khullar told reporters in New Delhi.
Low base effect makes even a nominal increase now appear large because the numbers in the year-ago comparable period were too low.
Imports, too, increased in April by 43.3% to $27.3 billion from $19.1 billion a year ago. Trade deficit for April was pegged at $10.4 billion over $6.7 billion in the year-ago period.
Oil imports increased to $8.1 billion compared to $4.7 billion in April last year.
The government is also considering a plan to develop four towns—Dhule, Aurangabad, Nashik and Dighi—which fall within a 150-km radius of the proposed corridor, as integrated mega-towns under the DMIC
The Maharashtra government wants to link the largest container port, Jawaharlal Nehru Port Trust (JNPT), to the ambitious Delhi-Mumbai Industrial Corridor (DMIC) project and said it would ask the DMIC Development Corporation to align the route of the corridor in the state for this purpose, reports PTI.
"We want JNPT, being a major port, to be connected to the proposed Delhi-Mumbai Industrial Corridor instead of routing (it) from within the busy financial capital as it already has several infrastructure projects on hand," principal secretary for industry A M Khan said.
The government is also considering a plan to develop four towns—Dhule, Aurangabad, Nashik and Dighi—which fall within a 150-km radius of the proposed corridor, as integrated mega-towns under the DMIC.
"These towns would have economic activities rather than just industrial units and would also attract international investment," Khan said.
A convention and exhibition centre has been planned at Shendra near Aurangabad. The town was chosen since other projects are being developed here as well, he said.
Engineering and design firm Aecom has been appointed as a consultant to study and identify projects and companies which can make investment in these townships, the official said.
A high-power committee under the chief secretary has also been appointed to look into the progress of work. The committee would also help in providing logistics, power and water supply for the project, he said.
The Delhi-Mumbai Industrial Corridor is a mega-infrastructure project passing through six states—Uttar Pradesh, Haryana, Rajasthan, Gujarat, Maharashtra and Madhya Pradesh—covering an overall length of 1,483 km between the political capital and the business capital of the country.