The Indian media and entertainment industry was one of the focus areas for Union Budget 2000-01. The industry in turn has witnessed total investment of about Rs 80 billion in 2000, indicating an increase of about 70 per cent over the previous year. The total turnover for the industry at about Rs 160 billion in FY 2000 experienced an increase of around 30 per cent in this period. Moreover, this industry had one of the highest number of initial public offerings (IPOs) in this period. Otherwise, the industry is highly unorganised with over 3,000 players operating in different segments.
The major segments can broadly be classified as cinema, music (cassettes and CDs), television, radio, print, entertainment parks and entertainment software. Cinema is the largest segment, followed by television. Indian industry produces largest number of films in the world (about 900 a year).
Globally, India is the third largest producer of original entertainment software with over 40,000 hours of original programming. However, in volume terms, this segment is dominated by the unorganised sector. Moreover, the export potential for entertainment software is significant.
In the television channel segment, there are more than 10 prominent players operating about 100 television channels (inclusive of regional channels).
This segment is likely to witness considerable changes with the recent introduction of direct-to-home (DTH) television and Internet over cable television network.
The industry sells over 350 million audio cassettes with more than 5,000 titles every year. The Indian music industry is the sixth largest in the world. However, a substantial proportion goes unaccounted because of pirated music. The radio segment is still mainly dominated by the government sector.
Major players in the print industry include the closely held family-run business groups. With the likely change in the entry norms of the international players in this segment, the market shares are likely to change considerably in the long term.
Entertainment parks is another fast growing segment. There are over 100 entertainment parks spread across major cities. With the increased levels of popularity of the concept of entertainment parks, the turnover growth rate and margins are likely to increase in this segment.
The current status of the industry
Indian media and entertainment industry commands a premium position in the global industry because it is the largest producer of films (over 900 per year); third largest producer of original entertainment software (over 40,000 hours per year) and sixth largest player in music industry (over 350 million audio cassettes and 5,000 titles every year).Industry witnessed investment growth of 70 per cent and turnover growth of about 30 per cent in 2000 over the previous year.Industry is highly unorganised with more than 3,000 players operating in different segments such as cinema, music, television, radio, print, entertainment parks and entertainment software. Satellite cable TV and entertainment parks are the fastest growing segments in the industry.Radio segment is still dominated by government sector, while closely-held family-run business groups control print.Key issues facing the industryUnorganised segment: A large proportion of industry is dominated by the unorganised sector, which acts as a hindrance in increasing the growth rates and market exposure of the industry. This also has a negative impact on investment from corporate sector in this industry.Export potential: The industry has a large export potential in terms of entertainment software. However, the same is restricted by lack of marketing and networking infrastructure.Infrastructure bottlenecks: A significant number of cinema halls and theatres are in a dilapidated stage, which dampens the growth prospects of industry. Encouragement by the government to invest in this industry can help in increasing the overall market size for the industry.Piracy: A substantial portion of industry is not accounted because of pirated copies. This works as a deterrent to investments, and thus increases growth rates. Further, differentiation in duty rates over different entertainment equipment, such as relatively higher duty on CDs, results in increase in piracy levels. Factors that can be addressed in the BudgetMedia and entertainment industry may be given equal status with information technology (IT) industry: This would increase tax and duty exemption benefits to the entertainment and media industry, which in turn would help increase the market size and margins for the industry.Foreign equity participation in media to be increased: This would help in increasing the investment in the Indian media industry, which would help in channelling the funds from the right sources. Also, this would provide an exposure to better technology, and thus, enhance the quality levels.Conducive and legislative framework for the industry: This would help in increasing the market share of the organised sector in the Indian media and entertainment industry. Further, this would augment the investment level of banks and other financial institutions in increasing the overall growth of the industry.
Abolition of countervailing duties on import of films: This would also help in increasing the overall market size for the industry, thus making the Indian industry globally competitive in terms of costing and quality parameters.
Rationalisation of entertainment tax and the same to be brought under concurrent list: The rationalisation of entertainment tax would provide the uniform platform for players in different states.
Provision of incentives for construction of theatres, entertainment parks and cinema halls: This would increase the overall market size for the Indian media industry.
Stronger anti-piracy laws: This would increase the market share for original programmes, and increase the margins for the industry.
Abolition of service tax on companies collecting revenues on behalf of foreign broadcasting companies: This would act as an incentive to increase the overall market size for media industry.
Introduction of professional courses on media and entertainment in universities.
Removal of 5 per cent customs duty on newsprint.Rationalisation of duty structure on import of entertainment hardware.(Concluded)
Copyright © 2001 Indian Express Newspapers (Bombay) Ltd.
