Indywood–The Indian Film Industry

September 2016

The Indian film industry is the largest in the world in terms of number of films produced with between 1,500 to 2,000 films produced every year in more than 20 languages.

In terms of revenue, the industry has gross box office realizations of $2.1 billion which is expected to grow at 11% CAGR reaching $3.7 billion by 2020. The key growth drivers for the industry are:

  • Increasing per capita income and growing middle class
  • Demand from Tier 2 and Tier 3 cities
  • Diversifying into international markets
  • Releasing the potential of digitization
  • Upside from ancillary revenue streams
  • Upcoming use of visual effects (VFX) in movies

With the thrust on promoting India as a filming destination, consideration of tax aspects on film shooting in India has become important especially with the introduction of GST, the biggest tax reform to be introduced in the country. The GST rate may see an upward rise vis-a-vis current applicable service tax rate. The foreign film producers/studios should structure contractual arrangements appropriately to mitigate tax risks and undertake Indian tax compliances (such as withholding tax on payments) as required. In case of star companies or loan-out corporations, additional complexities arise on account of triangular cases (i.e., situations where more than two countries are involved).

Film industry in India

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