The $1.8-billion Indian film industry is seeking intervention from the finance ministry to frame suitable guidelines for banking institutions to fund big-budget film projects.
Since the industry is increasingly getting corporatised, more theatres across the country are getting upgraded to multiplexes and initiatives to set up more digital cinema halls are already underway.
“Despite being a major source of entertainment, success rates for films are extremely low. Hardly 5% of films do extremely well; 5% of just manage to cover the costs and the balance 90% come up with losses and do not make any money. We have sought the finance ministry’s intervention to help the film industry in getting loans from banks after relevant due diligence,” says Ravi Kottarakara, general secretary, Film Federation of India.
“The industry operates in a precarious condition since finance is not available with banks, resulting in loans
being taken with high interest rates ranging from 36% to 46%. Given the background that 90% of movies are
flops, hardly any revenue is realised from the movie through theatre collections. In some cases, producers manage to sell the film to TV channels,” Kottarakara said.
“We are seeking suitable guidelines to be issued to banking institutions to recognise our industry status and fund film projects,” he said.
Besides, the industry is seeking reduction in duty from 10% to 2% for importing cameras and projectors. In fact, the sector was granted industry status in 1997 but nothing further has been done and the industry has not received any concession, Kottarakara said. The industry is also worried over the GST which will double tax in some states.
On tax deducted at source (TDS), he said when producers make TV serials and sell the same to satellite channels, the TDS rate is 1% or 2%.
But, when satellite channels purchase the film rights from producers, they deduct tax at source at the rate of 10% under Section 194-J of the Income Tax Act.
In fact, both TV serial producers and film producers are engaged in same sort of activities and therefore same rates of TDS deduction must be applicable at 1% or 2%, he claimed.