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Indian films losing out to foreign Indian films

Sunny Pawar, the young actor feted for his role in Lion

Indian films losing out to foreign Indian films

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SANTOSH MEHROTRA

MACRO VIEW

While Indian filmmakers fight the Censor Board — in the age of the internet when all sorts of content is available to all kinds of audiences — Hollywood imports have begun to make a serious impact on the box-office in this country.

Perhaps it is time to urgently look outward as well as inward if Indian cinema is not to lose ground to a double whammy of foreign imports hurting a local industry forced to become too tame for the international palate.

Most telling is the Australian film Lion produced with foreign investment and selling to the Weinstein Company for $12 million before generating $130 million at the box-office worldwide. The significant factor here is that the predominant language of Lion is Hindi. Clearly, a global audience for world cinema is more than happy to hear the authentic rhythms of the character and read the sub-titles. Starring the then six-year-old Sunny Pawar as well as Nicole Kidman and Dev Patel who plays Sunny’s grown-up self, the film found universal appeal.

A past example of this trend, Slumdog Millionaire, tells of even greater foreign success with an Indian narrative and there are plans to take more authentic Indian stories to the world — bypassing Bollywood which is being left to cater to the cultural diversity of the masses in Bharat and, hopefully, those in new markets such as China.

The trouble is that, with the intellectual property owners of Slumdog and Lion residing outside the Indian tax system, the benefits accruing to the Indian economy were production funds brought into the country as foreign exchange and a temporary recognition of the skillsets of Indian technicians. However, no share of the $1 billion in Slumdog’s case, nor Lion’s $130 million will find its way back to India which provided locations, labour and services but not investment or other incentives that might have entitled us to negotiate a share of the international pie.

Meanwhile, despite being the largest film industry in the world, Bollywood has actually been stagnating. Factoring in inflation, annual growth is in low single digits whereas films like Hollywood’s Jungle Book topped `135 crore in Indian box-office takings.

Is it not high time to analyse why India is failing on two fronts: one, why Indian producers prefer to shoot abroad and, two, why foreign filmmakers have to overcome innumerable obstacles to shoot here? With Bollywood fragmenting and contracting, why are we not doing more to reverse these trends and attract the makers of film and television series such as Homeland and Indian Summer to our country instead of letting South Africa and Malaysia steal away projects for which we have stronger cultural claims and geographical advantages?

Part of why India remains a country “to avoid shooting in” is that other countries offer producers rebates of 30-40 percent whereas India offers disincentives such as:

l Foreign filmmakers will be surcharged by 200 to 300 percent as separate pay scales and rentals apply; 

l Permissions will involve the I&B 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, the censorship process);

l 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.

Who needs all that when filmmaking is seen elsewhere as something to be won and then facilitated with red carpets rolled out for brave financiers, producers and directors with a universally appealing story to tell?

Because so much black money still finds its way into India’s domestic film industries, the government is rightly unwilling to rebate local filmmakers. However, when the country’s industry is clearly losing out to cost inflation and high entertainment tax, why is there not a mechanism to become a part of such foreign-owned intellectual property through whole-hearted and full-blooded cooperation? A clear-cut strategy needs to find political will and be implemented.

Other countries incentivise all filmmakers and help them complete their arduous work. Rebate systems such as in the UK and Canada and in many states in the US are thoughtfully structured to provide the host country/state with some skin in the game, via an equity share in a film or television series. If India does not quickly institute a similar system to attract filmmakers, it will continue to see an outflow of its best homegrown ideas and lose out to competing economies in Southeast Asia.

Take the UK, for example, which represents only around 7 percent of the world market for international film sales. India accounts for 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 as well as international independent studios.

Hollywood spends over $1.2 billion in the UK whereas in India, foreign producers might spend one percent of that figure or less. The same hunger to compete, as the UK, might wean India off its unhealthy dependence on Bollywood and make some of its talented directors aim their stories at a global audience as well as those many millions of cinemagoers in India with comparable tastes. This is a more likely way to retain a share of the commercial spoils.

The following steps could have a direct positive economic impact that could transform this situation and repatriate a share of the net global income from such films to India.

 l 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 proportionate share of world net revenue back into the Indian tax net. An example of this is Sir Richard Attenborough’s Gandhi in whose case even today six-monthly remittances are made to the Indian government by the film’s revenue collection agency. In today’s world, the central government would be encouraging such FEFFs by refunding a proportion of the costs spent in India which can be traced back to the inward remittance of foreign currency. The local executive producer, facilitating such a refund, would be in a position to command a share of the film’s net revenues just as his counterpart does in the UK, Canada and elsewhere.

l Institute a level playing field by removing the inflated costs that are charged to international producers, costs that currently deter them from filming here. This would need to be imposed on all Indian film associations and unions. The culture of surcharging the foreigner has no place in a competitive environment in 21st century India.

l Empower the Film Facilitation Office, currently being set up in Delhi, to deal with script approvals by qualified script readers and to obtain permissions in a painless manner. I understand this has government backing but await the announcement of foreign films being shot here on the back of it.

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 in the region are winning business at India’s cost in lost revenue, accolades, profits and taxes. If we are to have ‘make in India’ then let us have it or we shall continue to see filmmakers ‘faking’ India elsewhere. 

(With inputs from Michael E. Ward, Producer, Kreo Films, UAE) Santosh Mehrotra is Professor of Economics, JNU, and Senior Fellow, JustJobs