24th January – Untapped soft power

A PWC report states that the media and entertainment industry in India outperformed expectations in FY19 and was amongst the fastest-growing sectors with a growth rate of 13%. India produces the maximum number of films in a year worldwide.

Concerns –

1. Revenue shortfalls –

  • Despite this, it is still far from being recognised as an important sector for the government.
  • Initially, under the Goods and Services Tax regime, the film industry was slotted under the ‘luxury’ category. A tax rate of 28% was imposed on it. After an outcry, this was revised to 18%.
  • However, GST poses a challenge: if a particular movie appeals to a State government, that government can grant ‘tax free’ status to that film.
  • With the GST in place, States can waive off the SGST (9%) alone. Therefore, a movie deemed ‘tax free’ is still be liable to pay CGST.

2. Lack of infrastructure and courses –

  • Deeming the entertainment sector as a ‘luxury’ sector undermines its soft power. The soft power of the Indian industry is seen in the many public service messages and political campaigns that use film actors to propagate their messages.
  • India lacks the infrastructure to take films to interior areas. For a population of 1.37 billion people, India has less than 10,000 screens, of which 6,700 are single screens. The procedure to convert a single screen theatre to a multiplex is tedious and costly. New permission and licenses are required, and existing licenses often hold little value.

3. Industry status –

  • The Hindi film industry was accorded industry status only in 1998, even though the first Indian film was made in 1913.
  • The industry employs a vast number of technicians and creative professionals. But there are no formal guidelines for courses related to the film industry.
  • The government created the Film and Television Institute of India, but its curriculum is not binding on other private film schools.
  • There are barely any government academies catering to the industry. In contrast, film education in the U.S. is accorded the same importance given to journalism or biotechnology.

4. Not enough incentives –

  • American states provide incentives such as tax shelters, cash rebates and grants to productions taking place in their territories.
  • Countries like the U.K. and Malta provide incentives such as easy clearances and rebates upto 30-40% of the total cost of the projects filmed there.
  • In India the incentives are much lower, and in most States the cash rebates are capped at nominal amounts which are not lucrative for big-budget productions.
  • Though there is now a single-window clearance for shoots in many States, shooting at various spots such as archaeological sites requires multiple permissions and is a time-consuming and arduous process.

Chinese model –

China has about 60,000 screens for a population of 1.4 billion. These were created over the last decade with government support in the form of public-private partnership models, which makes the country a viable market for foreign film industries as well. This has created revenue for the Chinese government as foreign films have to share a sizeable amount of their profit with the state.


Tapping into the potential of this multi-seasonal industry opens a plethora of opportunities: from better international awareness about the country to creating employment opportunities within.

SourceThe Hindu

QUESTIONIt is being argued that India’s film industry is one of the strongest component of India’s soft power. But it is plagued with several issues hampering its growth potential. Discuss.

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