Global media companies see significant opportunities in India's growing entertainment economy. India has a large population, including many young people, and rising incomes are fueling increased spending on entertainment. To succeed, global companies must localize content for India's diverse regional markets and distribution channels. They also need to understand pricing constraints due to competition and piracy. While opportunities exist across sectors like television, film and digital, companies must mitigate risks such as regulatory differences and financial transparency issues.
India’s strong consumption story relies on its demographic structure, which, at this
point in time, is highly favourable compared to most other emerging nations. As per
the UN population statistics, this favourable demographic dividend will last for another
25–30 years. Before that, most other emerging nations would have already begun to
witness a slowdown in the growth of young (working-age) population.
The ensuing benefits with regard to the rising income and household spending would
provide a significant boost to the consumption-driven growth story of India. A glimpse
of the changing pattern of India’s consumption is already visible in the breakdown
of private final consumption spending data provided by the government. There is
a marked increase in spending on lifestyle products and services such as hotels,
mobiles, transportation and other miscellaneous goods. As against that, spending on
essentials has only remained stable.
International retailers are well aware of these benefits that the Indian economy offers.
Barring few legislative challenges that could be tackled through the policy reforms and
opening up of the retail sector, retailers have often expressed their intention to enter
and invest in India’s attractive retail sector. This is very well reflected in AT Kearney’s
Global Retail Development Index 2012, where India ranks as the fifth most attractive
retail market for international retailers. The retail sector is a significant contributor to India’s economic activity. Though a
direct measurement of the retail sector is difficult to derive through government
statistics, the trade, hotels and restaurant sectors come close to giving us an
estimate of its contribution. That component, in which retail (both organised and
unorganised) is the dominant activity, accounts for around 18% of India’s GDP.
Within the services sector of India, this component is the largest contributor
to the economy. Many institutions, however, may not agree with this possibly
understated measurement of the retail sector, as it may not accurately account
for the unorganised sector. For instance, as per the estimates of the Associated
Chamber of Commerce and Industry (ASSOCHAM) presented in one of its retail
reports of 2012, the contribution of both organised and unorganised retail stood
at 22% of GDP. This would mean that Indian retail sector size should measure
closer to INR 19.2 trillion in 2012. Leading research institutions such as AT
Kearney and ASSOCHAM estimate this sector to grow at around 15% y-o-y over
the next three–five years as against a 12%–13% nominal growth of India’s GDP
estimated by the International Monetary Fund (IMF). Going by that logic, the retail
sector should reach a size of INR 34 trillion by 2016. This is a significant growth.
The sector is also an important contributor towards the socioeconomic well-being
of the economy as it employs close to 9.4% of India’s labour force, as per the
association.
Retail Marketing in Rural India – Factors in Favour and StrategiesDr. Amarjeet Singh
Retail industry now accounting for 10% of the
country’s GDP undergoes dynamic changes boosting its
growth still further. The sector grows impressively leading
to production of wide range of products and services.
Rural markets provide great scope for marketers due to
increased revenue and purchase power of the rural
population in India. The rural income is expected to
increase faster due to government policies supporting
agriculture and the earning population that has
temporarily moved out of rural villages to cities for
employment in non-agricultural sectors. Technology in
agriculture has helped to produce quality crops and the
market is ready to give high prices for such products.
Around 60% of the students in the colleges are first
generation graduates who have moved out of their villages
for tertiary education. Thus the life style, likes and
preferences of the rural population keeps changing.
However the huge rural segment is much different from
that of the urban segment and the marketers need to
approach with sustained efforts and special models. The
highly fragmented rural segment’s needs are majorly filled
by unorganized family run Kirana stores and Maligai
shops. The share of organised retail in the country has
risen by 60% and the same is expected to have impact on
the rural market as well. The paper focuses on the growth
of retail market in India, the emerging factors in favour of
rural retail and suggests strategies for rural retailing.
India’s strong consumption story relies on its demographic structure, which, at this
point in time, is highly favourable compared to most other emerging nations. As per
the UN population statistics, this favourable demographic dividend will last for another
25–30 years. Before that, most other emerging nations would have already begun to
witness a slowdown in the growth of young (working-age) population.
The ensuing benefits with regard to the rising income and household spending would
provide a significant boost to the consumption-driven growth story of India. A glimpse
of the changing pattern of India’s consumption is already visible in the breakdown
of private final consumption spending data provided by the government. There is
a marked increase in spending on lifestyle products and services such as hotels,
mobiles, transportation and other miscellaneous goods. As against that, spending on
essentials has only remained stable.
International retailers are well aware of these benefits that the Indian economy offers.
Barring few legislative challenges that could be tackled through the policy reforms and
opening up of the retail sector, retailers have often expressed their intention to enter
and invest in India’s attractive retail sector. This is very well reflected in AT Kearney’s
Global Retail Development Index 2012, where India ranks as the fifth most attractive
retail market for international retailers. The retail sector is a significant contributor to India’s economic activity. Though a
direct measurement of the retail sector is difficult to derive through government
statistics, the trade, hotels and restaurant sectors come close to giving us an
estimate of its contribution. That component, in which retail (both organised and
unorganised) is the dominant activity, accounts for around 18% of India’s GDP.
Within the services sector of India, this component is the largest contributor
to the economy. Many institutions, however, may not agree with this possibly
understated measurement of the retail sector, as it may not accurately account
for the unorganised sector. For instance, as per the estimates of the Associated
Chamber of Commerce and Industry (ASSOCHAM) presented in one of its retail
reports of 2012, the contribution of both organised and unorganised retail stood
at 22% of GDP. This would mean that Indian retail sector size should measure
closer to INR 19.2 trillion in 2012. Leading research institutions such as AT
Kearney and ASSOCHAM estimate this sector to grow at around 15% y-o-y over
the next three–five years as against a 12%–13% nominal growth of India’s GDP
estimated by the International Monetary Fund (IMF). Going by that logic, the retail
sector should reach a size of INR 34 trillion by 2016. This is a significant growth.
The sector is also an important contributor towards the socioeconomic well-being
of the economy as it employs close to 9.4% of India’s labour force, as per the
association.
Retail Marketing in Rural India – Factors in Favour and StrategiesDr. Amarjeet Singh
Retail industry now accounting for 10% of the
country’s GDP undergoes dynamic changes boosting its
growth still further. The sector grows impressively leading
to production of wide range of products and services.
Rural markets provide great scope for marketers due to
increased revenue and purchase power of the rural
population in India. The rural income is expected to
increase faster due to government policies supporting
agriculture and the earning population that has
temporarily moved out of rural villages to cities for
employment in non-agricultural sectors. Technology in
agriculture has helped to produce quality crops and the
market is ready to give high prices for such products.
Around 60% of the students in the colleges are first
generation graduates who have moved out of their villages
for tertiary education. Thus the life style, likes and
preferences of the rural population keeps changing.
However the huge rural segment is much different from
that of the urban segment and the marketers need to
approach with sustained efforts and special models. The
highly fragmented rural segment’s needs are majorly filled
by unorganized family run Kirana stores and Maligai
shops. The share of organised retail in the country has
risen by 60% and the same is expected to have impact on
the rural market as well. The paper focuses on the growth
of retail market in India, the emerging factors in favour of
rural retail and suggests strategies for rural retailing.
List of Profitable Business Ideas in Education Sector. Ajjay Kumar Gupta
List of Profitable Business Ideas in Education Sector. Project Opportunities in Education Industry (School, University, Engineering, Medical, Dental, Pharmacy, Management, Nursing, Physiotherapy Colleges, Institutes).
India holds an important place in the global education industry. The country has more than 1.5 million schools with over 260 million students enrolled and about 751 universities and 35,539 colleges. India has one of the largest higher education systems in the world. Around 35.7 million students were enrolled in higher education in India during 2016-17.However; there is still a lot of potential for further development in the education system.
See more
https://goo.gl/gA7wDj
https://goo.gl/oN41ge
https://goo.gl/DHt3bV
https://goo.gl/B22nrp
Contact us:
Niir Project Consultancy Services
An ISO 9001:2015 Company
106-E, Kamla Nagar, Opp. Spark Mall,
New Delhi-110007, India.
Email: npcs.ei@gmail.com , info@entrepreneurindia.co
Tel: +91-11-23843955, 23845654, 23845886, 8800733955
Mobile: +91-9811043595
Website: www.entrepreneurindia.co , www.niir.org
Tags
Starting a Nursery School, How to Start a Nursery School in India? How to open a nursery school in India, Start your own Nursery School, How to Start Pharmacy College (B-Pharma & D-Pharma), How to Start a College in India? How to Start Management College, Management College (BBA, BCA, MBA, MCA), How to Open Polytechnic College (Technical Education Institution) in India, How to Open Marine Engineering College, How to Start Dental College? Start Your Own School in India, How to Open School (Residential)? Pre Nursery & Nursery School, Residential School, Starting a CBSE Primary School, How to Start a School (CBSE Pattern), IGCSE (International General Certificate of Secondary Education) School (Nursery to Senior Secondary), How to Open Medical College with Hospital, Industrial Training Institute (ITI), Bachelor of Physiotherapy College (B.PT. College), Marine Engineering College project ideas, Projects on Small Scale Industries, Small scale industries projects ideas, Project profile on small scale industries, How to Start Industrial Training Institute in India, Management College Projects, New project profile on Medical College with Hospital, Project Report on Detailed Project Report on Management College, Project Report on Bachelor of Physiotherapy College (B.PT. College), Pre-Investment Feasibility Study on CSE (International General Certificate of Secondary Education) School, Techno-Economic feasibility study on Pre Nursery & Nursery School, Feasibility report on Polytechnic College, Free Project Profile on Pharmacy College (B-Pharma & D-Pharma), Project profile on Nursery School, Download free project profile on Management College, Industrial Project Report, Startup Project for Polytechnic College, Startup Project, Startup ideas, Project for startups, Startup project plan, Business start-up, Business Plan for a Startup Business
to measure the Impact of sales promotion on personal care products vs consume...Sunny Gandhi
impact of sales promotion, communications, consumer electronics, personal care products, aida model research, cognition affection and behaviour with sales promoton, demographics and response to sales promotion.
Use of E-resources and Services by Users at Indian Institute of Management Ah...iosrjce
IOSR Journal of Humanities and Social Science is a double blind peer reviewed International Journal edited by International Organization of Scientific Research (IOSR).The Journal provides a common forum where all aspects of humanities and social sciences are presented. IOSR-JHSS publishes original papers, review papers, conceptual framework, analytical and simulation models, case studies, empirical research, technical notes etc.
List of Profitable Business Ideas in Education Sector. Ajjay Kumar Gupta
List of Profitable Business Ideas in Education Sector. Project Opportunities in Education Industry (School, University, Engineering, Medical, Dental, Pharmacy, Management, Nursing, Physiotherapy Colleges, Institutes).
India holds an important place in the global education industry. The country has more than 1.5 million schools with over 260 million students enrolled and about 751 universities and 35,539 colleges. India has one of the largest higher education systems in the world. Around 35.7 million students were enrolled in higher education in India during 2016-17.However; there is still a lot of potential for further development in the education system.
See more
https://goo.gl/gA7wDj
https://goo.gl/oN41ge
https://goo.gl/DHt3bV
https://goo.gl/B22nrp
Contact us:
Niir Project Consultancy Services
An ISO 9001:2015 Company
106-E, Kamla Nagar, Opp. Spark Mall,
New Delhi-110007, India.
Email: npcs.ei@gmail.com , info@entrepreneurindia.co
Tel: +91-11-23843955, 23845654, 23845886, 8800733955
Mobile: +91-9811043595
Website: www.entrepreneurindia.co , www.niir.org
Tags
Starting a Nursery School, How to Start a Nursery School in India? How to open a nursery school in India, Start your own Nursery School, How to Start Pharmacy College (B-Pharma & D-Pharma), How to Start a College in India? How to Start Management College, Management College (BBA, BCA, MBA, MCA), How to Open Polytechnic College (Technical Education Institution) in India, How to Open Marine Engineering College, How to Start Dental College? Start Your Own School in India, How to Open School (Residential)? Pre Nursery & Nursery School, Residential School, Starting a CBSE Primary School, How to Start a School (CBSE Pattern), IGCSE (International General Certificate of Secondary Education) School (Nursery to Senior Secondary), How to Open Medical College with Hospital, Industrial Training Institute (ITI), Bachelor of Physiotherapy College (B.PT. College), Marine Engineering College project ideas, Projects on Small Scale Industries, Small scale industries projects ideas, Project profile on small scale industries, How to Start Industrial Training Institute in India, Management College Projects, New project profile on Medical College with Hospital, Project Report on Detailed Project Report on Management College, Project Report on Bachelor of Physiotherapy College (B.PT. College), Pre-Investment Feasibility Study on CSE (International General Certificate of Secondary Education) School, Techno-Economic feasibility study on Pre Nursery & Nursery School, Feasibility report on Polytechnic College, Free Project Profile on Pharmacy College (B-Pharma & D-Pharma), Project profile on Nursery School, Download free project profile on Management College, Industrial Project Report, Startup Project for Polytechnic College, Startup Project, Startup ideas, Project for startups, Startup project plan, Business start-up, Business Plan for a Startup Business
to measure the Impact of sales promotion on personal care products vs consume...Sunny Gandhi
impact of sales promotion, communications, consumer electronics, personal care products, aida model research, cognition affection and behaviour with sales promoton, demographics and response to sales promotion.
Use of E-resources and Services by Users at Indian Institute of Management Ah...iosrjce
IOSR Journal of Humanities and Social Science is a double blind peer reviewed International Journal edited by International Organization of Scientific Research (IOSR).The Journal provides a common forum where all aspects of humanities and social sciences are presented. IOSR-JHSS publishes original papers, review papers, conceptual framework, analytical and simulation models, case studies, empirical research, technical notes etc.
http://dolce.atsgreens.com/
It is situated at Sector Zeta 1 in Greater Noida. The project is located at a distance of 5 km from Pari Chowk (less than 10 minutes’ drive), a major landmark in Greater Noida. Knowledge Park (8 km) and Yamuna Expressway (11 km) are also within a convenient distance from the project. In addition, there are several schools, institutions, hospitals and malls in close vicinity. The project is 55 km from Delhi Airport and 45 km from New Delhi railway station.
Budget 2015-16 Evoked Astounding Reactions on Social MediaSimplify360
The Union Budget for the financial year 2015-2016 has seen a sudden change in approach. This time the focus has shifted from a middle class society friendly outcome to a more growth focused one. The trending topics on Twitter revolved around taxation, education, infrastructure, insurance and banking. However, the trend seemed to differ according to the needs of a particular place or segment of citizens in the society.
However, the budget also saw a number of negative trends such as anti-poor, increasing service tax and more. The sectors which received the most negative trend were taxation and education. This presentation gives you a complete idea about how the budget was represented on social media, by various sections of the society.
this ppt is regarding globalization and it's impact on indian economy, i had made this for my business enviroment programme.
plz leave a comment about this if you like it.
2. Spotlight on India’s entertainment economy
Foreword India’s entertainment economy is growing rapidly, and the world is taking note.
The country is among the world’s youngest nations, with more than half a
billion people under the age of 25. With favorable demographics and a rise in
disposable incomes, the propensity to spend on leisure and entertainment is
growing faster than the economy itself.
Enticed by economic liberalization and the huge volume of demand for leisure
and entertainment, many of the global media giants have been present in the
Indian market for more than two decades. However, in recent years, with near
double-digit annual growth and a fast-growing middle class, there has been a
renewed surge in investment in the country by global companies. Companies
in the US and Western Europe see their growth increasingly linked to emerging
giants like India, which is why they are now focused on the best way to enter,
grow and brand their business in this market.
The Indian media and entertainment (M&E) industry now finds itself at a
new inflection point — digital media. A surge in mass broadband adoption is
expected, led by the launch of 3G and 4G services. In conjunction with the
country’s mobile phone user base, more than 750 million subscribers, the scale
and impact of potential digital content consumption is enormous. This presents
M&E companies, foreign and domestic, with an exciting opportunity to develop
digital businesses that cater to a new generation of Indian digital consumers.
To succeed in this market, there are several success factors that global
companies need to take into account. While there are many opportunities
to tap, there are also unique challenges in the areas of content localization,
distribution and pricing, regulations and piracy.
In this report, we examine India’s M&E landscape and provide an overview
of the key opportunities, challenges and critical success factors in doing
business there.
John Nendick
Global Industry Leader
Media & Entertainment,
Ernst & Young
Farokh T. Balsara
EMEIA Leader
Media & Entertainment,
Ernst & Young
3. Spotlight on India’s entertainment economy
Executive summary 01
Economy and demographics 03
India’s entertainment economy:
Trends, growth drivers and challenges 04
Sectors and growth opportunities 10
Investing in the Indian M&E industry: key regulations 28
Doing business in India 29
Conclusion 35
Media & Entertainment contacts 36
Table of contents
4. Spotlight on India’s entertainment economy1
Executive summary
India is surging. The second fastest growing global economy
and the fourth-largest economy in terms of purchasing power
parity, India’s increasing per capita income, growing middle
class and working population are generating huge domestic
demand for goods and services — including leisure and
entertainment.
Global enterprises are taking notice. India ranked as the most
important market for sales in Ernst & Young’s recent survey,
Competing for growth: how business is growing beyond
boundaries, which interviewed some 400 C-suite and marketing
professionals from global corporations. As global business
leaders start to compete again for growth opportunities, there
is an increasing sense of urgency among them to seize the
prospects offered by the Indian market.
With more than 600 television channels, 100 million pay-TV
households, 70,000 newspapers and 1,000 films produced
annually, India’s vibrant media and entertainment (M&E)
industry provides attractive growth opportunities for global
corporations. Enticed by economic liberalization and high
volumes of consumption, many of the world’s media giants have
been present in the Indian market for more than two decades.
However, in recent years, with near double-digit annual growth
and a fast-growing middle class, there has been a renewed
surge in investments into the country by global companies.
Media sectors regarded as “sunset” industries in mature
markets are flourishing in India, presenting global media
companies with exciting opportunities to counter declining
revenues. For example, the newspaper industry, which is facing
declining readership in many international markets because of
digital media, continues to thrive in India, driven by increasing
literacy rates, consumer spending and the growth of regional
markets and specialty newspapers. Newspapers account for
42% of all advertising spend in India, the most of any medium.
India’s favorable regulatory environment and recent reforms
are creating investment opportunities in a number of M&E
sectors. Entry restrictions for foreign companies have been
relaxed and foreign direct investment (FDI) caps have been
recently increased in key sectors, including direct-to-home
(DTH) and radio. The mandatory digitization of the country’s
TV distribution infrastructure has spurred growth of digital
cable and DTH and created a need for these companies to fund
expansion. And the third round of radio license auctions (phase
III), expected in the near future, will see radio networks adding
around 700 radio stations across the country.
And then there are India’s diverse content markets. The
majority of India’s urban consumption comes from non-metro
cities (so-called Tier 2 and Tier 3 towns) — regional markets
with distinct cultures, languages and content preferences.
5. 2Spotlight on India’s entertainment economy
These regional markets — huge “markets within a market” —
provide global M&E companies with a variety of opportunities
to deliver localized content. Many global film studios and TV
broadcasters have already entered these markets and are
producing regional-language content.
Finally, there is the evolution of digital content consumption.
The consumption of digital content in India is at an inflection
point. Although internet penetration is currently low, the
recent launch of 3G services and the eventual launch of
4G are expected to bring a “late surge” in wireless-based
broadband adoption. In conjunction with the country’s mobile
phone user base, of more than 750 million subscribers, the
scale and impact of potential digital content consumption
is enormous. This presents M&E companies, foreign and
domestic, with an exciting opportunity to develop digital
businesses that cater to a new generation of broadband users.
While there are many opportunities to tap, there are
also unique differences and challenges. Diverse content
preferences and the low price point and high volumes of
content consumption are some of the critical differences
that global M&E companies need to assess when entering
the Indian market. Companies that understand and adapt
to the economic and social fabric of the Indian operating
environment and that invest in tailored content and services
are likely to maximize their success.
M&E companies operating in India continue to be exposed to
risks ranging from local competition to fraud, corruption and
piracy. Although the development of corporate governance
norms and ongoing structural and regulatory reforms are
expected to mitigate these threats, global M&E companies
should develop flexible business plans and identify and
develop mitigation strategies for key risks.
Summary of key points
• Localize content: To succeed in India, global media
companies need to localize their content and be sensitive to
local culture. Content needs to be repurposed to suit local
audiences.
• Assess pricing and distribution channels: Global companies
need to thoroughly assess the market and distribution
channels to price content appropriately. The price point
in India is just a fraction of what consumers would pay in
a developed market due to competition, regulations and
piracy. However, the huge and fast-growing volumes more
than make up for the low prices.
• Understand regional nuances: India has several
internal markets with different languages and consumer
preferences. For example, the M&E market in South India is
distinctly different than that of northern India. To succeed,
global companies need to adopt different strategies for each
region, as there will be differences in demand, the type of
content desired, the mode of distribution of content and the
revenue models employed.
• Financial risk mitigation: Foreign investors should
remember that the due diligence process in emerging
markets such as India can pose unique challenges. Lack of
transparency and concerns over the integrity of financial
data can significantly diminish the ability to get a true
picture of the financial results. Investors need to understand
their exposure to financial contingencies. Identifying key
risks and exposures will increase the chances of completing
successful transactions in India.
7. 4Spotlight on India’s entertainment economy
India’s entertainment economy:
trends, growth drivers and
challenges
The Indian M&E industry was valued at US$16.3 billion in 2010. The industry is forecast to grow
at a compound annual growth rate (CAGR) of 12% to reach a value of US$25.8 billion in the next
four years.
India’s M&E industry is one of the fastest-developing in the country, driven by changing
consumption patterns, increasing middle-income households and the propensity of consumers
to spend on leisure and entertainment.
M&E companies in India are rapidly diversifying beyond their traditional domains to leverage
synergies and build a presence across multiple segments of the M&E industry.
Digitization of content and platforms, redefinition of prevalent business models, globalization
of the M&E industry, relatively easier access to capital and the emergence of multiple
entertainment options have been some of the key trends that are shaping the M&E industry
in India.
Figure 2
M&E industry revenue by segment (2010E to 2014E)
Source: “Update on Indian M&E industry,” CRISIL Research, December 2010
*Other include outdoor, internet and mobile advertising
0
5
10
15
20
25
30
2010E 2011E 2012E 2013E 2014E
US$billion
Other*
Music
Radio
Films
Publishing
Television
16.3
18.3
20.6
23.1
25.8
8. Spotlight on India’s entertainment economy5
With a conducive regulatory environment
and high volumes of content consumption,
India holds significant potential for
foreign investments across all segments
of the M&E industry. Many global M&E
conglomerates have been present in
India for more than a decade, and others
continue to make forays.
14. Spotlight on India’s entertainment economy11
Digitization is creating exciting
opportunities across the broadcasting
value chain and providing more choice
to consumers. DTH and cable operators
are expanding aggressively and focusing
on premium services. Broadcasters
are leveraging the lower cost of digital
delivery to expand by focusing on
regional and niche content.
18. 15 Spotlight on India’s entertainment economy
While in a number of international markets
the newspaper industry is facing declining
readership because of digital media, the
print industry in India is thriving, driven
by an increase in consumer spending,
a rise in literacy rates and the growth
of regional-language and specialty
newspapers.
32. Spotlight on India’s entertainment economy29
This guide provides global M&E companies with a general
overview of business organizations, taxation and business
principles in India. For further information, please refer to
Ernst & Young’s detailed reference guide to doing business in
India, available at http://www.ey.com/IN/en/Services/Tax.
Entry options
• Liaison/representation office: Foreign corporations are
permitted to open liaison/representative offices in India
to undertake specific liaison activities on their behalf,
including acting as a communication channel between
them and Indian customers. The opening of a liaison/
representative office is subject to approval by the Reserve
Bank of India (RBI). Applications by companies are typically
subject to close scrutiny.
• Branch or project office: Foreign corporations may open
branch offices to conduct activities permitted by the RBI
after obtaining approval from the RBI. Setting up a branch
office without RBI approval is possible within a special
economic zone (SEZ), subject to certain conditions.
• Local Indian subsidiary companies: Foreign corporations
can set up subsidiary companies in India, subject to FDI
guidelines. Further, foreign corporations can set up a joint
venture company with an Indian or foreign partner.
• Limited liability partnership (LLP): An LLP provides
more flexibility in operations compared with a subsidiary.
Recently, FDI has been permitted in LLPs subject to
prescribed conditions.
Funding of Indian businesses
Modes of funding need to be carefully evaluated when investing
in India because of the country’s foreign exchange regulations.
This section outlines the various options through which an
Indian subsidiary can be funded.
• Equity share capital: Equity share capital is a conventional
method of funding a local Indian subsidiary company.
• Preference share capital: Foreign corporations can also
invest in India through the issuance of preference shares.
Foreign investments through convertible preference shares
that are fully and mandatorily convertible into equity
shares are treated as FDI. Preference shares that are not
mandatorily convertible into equity shares are considered
external commercial borrowings (i.e., debt) and need to
conform to external commercial borrowing (ECB) guidelines
(discussed in the following section).
• Debentures and borrowings:
• Debentures: Companies can raise funds by issuing
debentures, bonds and other debt securities or by
accepting deposits from the public. Debentures can
be redeemable; perpetual, bearer or registered; and
convertible or non-convertible. Like preference shares,
the treatment of debentures as FDI or ECB depends on
their convertibility into equity shares.
• ECB: Debt raised in foreign currency (from internationally
recognized sources) falls within the purview of the
definition of ECBs (as per the regulations), and they are
regulated by the Ministry of Finance and the RBI. ECBs
can be accessed under two routes: the automatic route
Doing business in India
33. 30Spotlight on India’s entertainment economy
(without RBI approval) and the approval route (with RBI
approval). The funds raised can be used for prescribed
purposes and are subject to end-use restrictions. M&E
companies need to carefully evaluate debt funding
options, as the sector is not normally covered under
the automatic route. All cases outside the purview of
the automatic route are reviewed by an empowered
committee of the RBI.
• Trade credits: Trade credits for imports are also
permitted in some situations.
• Other forms of funding: These include the issue of
American Depository Receipts, Global Depository Receipts,
and Foreign Currency Convertible Bonds.
Mergers and acquisitions
Corporate reorganization can be carried out in the form of
mergers, demergers, arrangements, capital reductions, slump
sale, buy-back, acquisitions, etc. Some of these are driven by
court processes, while others can be carried out by corporate
law processes without approaching the court. Further,
certain reorganizations also require procedures involving the
Competition Commission of India.
Repatriation of capital and income
Foreign capital invested in India is generally allowed to be
repatriated in the form of dividends or interest payments after
payment of taxes due, provided the investment was made on a
repatriation basis.
Other payments, like royalties, technical service fees and
consultancy fees, are permitted, subject to conditions.
Incentive regimes/benefits/other
beneficial provisions
• SEZs: Units can be set up in SEZs for manufacturing,
trading or services activity. Profits derived by undertakings
set up in SEZs are allowed as a deduction from the
computation of taxable income for income tax purposes
subject to prescribed conditions. However, income earned
by SEZ units will be subject to Minimum Alternate Tax (MAT)
starting in financial year 2011-12.
• Intangibles: Certain prescribed intangibles are entitled
to depreciation at 25%. Film production costs or costs of
acquisition of distribution rights for a film are entitled to
100% amortization, depending on the date of release of
the film.
• Others:
• Expenses on research and development can be entitled
to a weighted deduction of 200% of the cost incurred,
subject to conditions.
• There are provisions under the Income Tax Act, 1961 (IT
Act), that allow income tax exemption on certain income
from international sporting events held in India, subject
to conditions. Further, specified income of non-resident
sportsmen may be subject to tax at 10% (plus applicable
surcharge and education cess).
• Under the IT Act, income from the sale, distribution or
exhibition of cinematographic films is not covered under
the definition of royalty. Income of a non-resident from
activities confined to shooting of a film in India can be
evaluated for exemption from income tax.
34. 31 Spotlight on India’s entertainment economy
Direct taxes
• Corporate income tax: The Indian tax year for companies
extends from 1 April to 31 March of the following year.
Corporations reporting international transactions are
required to file their Return of Income (ROI) by 30
November. All other corporations are required to file an ROI
by 30 September, even in the event of a loss. Non-resident
Figure 13
Corporate tax rates
Particulars Percentage1
Corporate income tax for domestic corporations 30
Corporate income tax for foreign corporations 40
Corporate income tax for LLPs 30
MAT on book profits 18.5
Alternative minimum tax on book profits for LLPs 18.5
Dividend distribution tax 15
Withholding tax on dividends 0
Withholding tax on royalties or fees for technical services 102
Withholding tax on interest to non-resident corporations 203
Wealth tax 14
Capital gains Percentage1
Long-term capital gains 205
Short-term capital gains 30-406
Net operating losses Years
Carryforward 8
Unabsorbed depreciation Indefinitely
1
The rates listed have to be increased by applicable surcharge and education cess.
2
These rates apply for agreements entered into on or after 1 June 2005 and that satisfy other conditions.
3
This rate applies to interest on foreign currency loans given to an Indian concern or to the Government of India.
4
Wealth tax is applicable on certain specified assets if the taxable value of a corporation’s net wealth exceeds INR3 million.
5
Long-term capital gains arising from the transfer of equity shares or the units of an equity-oriented mutual fund on any recognized stock
exchange in India are exempt from tax if Securities Transaction Tax (STT) has been paid on such transactions.
6
In general, short-term capital gains are taxed at normal corporate tax rates. However, short-term capital gains arising from the transfer of equity
shares or the units of an equity-oriented mutual fund on any recognized stock exchange in India on which STT has been paid are taxed at 15%.
corporations should evaluate filing a ROI in India if they
conduct business in the country. Non-resident corporations
are taxed on the income earned from a business connection
in India or from other Indian sources. If there is a tax treaty
between India and the country of residence of the taxpayer,
the provisions of the IT Act or the tax treaty, whichever is
more beneficial, will apply.
35. 32Spotlight on India’s entertainment economy
• Other considerations:
• India has a strict withholding tax regime, and, therefore,
tax withholding from payments requires careful
evaluation.
• Payments in the absence of a tax registration number
may be subject to a higher rate of tax withholding.
• The Authority for Advance Ruling (AAR) can be
approached for questions relating to the tax liability of a
non-resident from a transaction that has already taken
place or one that will be undertaken. The rulings of the
AAR are binding on the tax authorities as well as the
applicant.
• Amalgamations and demergers are tax-neutral, subject to
the satisfaction of prescribed conditions. Non-satisfaction
of conditions also has implications on losses to be carried
forward.
• Direct Tax Code (DTC) 2010: This section summarizes
the various provisions introduced under the DTC 2010,
which will go into effect on 1 April 2012 and will replace the
existing direct tax legislations (IT Act and the Wealth Tax
Act). Tax rates proposed under DTC 2010 are summarized
in Figure 14.
• Some important provisions of DTC 2010 include:
• Introduction of general anti-avoidance rules,
which permit the revenue authorities to declare an
arrangement that has the main purpose of avoiding
tax (beyond a specified threshold) as impermissible.
• Controlled Foreign Company (CFC) rules for taxability
of income earned by a foreign company controlled by
resident shareholders.
• The definition of royalty will also include:
• Income from distribution of cinematographic films
• Payments for transfer of rights to live coverage of
events
• Payments for use of transmission by satellite,
cable, optic fiber
• The current profit-based incentive regime will be
replaced by an investment-based incentive regime.
Figure 14
Proposed tax rates under DTC 2010
Particulars Percentage1
Basic tax rate for domestic and foreign corporations 30
MAT 20
Branch profit tax (which includes tax on profits attributable to a permanent establishment) 15
Net operating losses Years
Carryforward Indefinitely
1
The rates listed have to be increased by applicable surcharge and education cess.
36. Spotlight on India’s entertainment economy33
Transfer pricing
The Indian transfer pricing regulations require that any
international transaction between two or more associated
enterprises (including permanent establishments) must be at
an arm’s length price (ALP). Currently, safe harbor rules and
advance pricing arrangements (APAs) are not in force in India,
although the DTC 2010 proposes implementing them.
Indirect Taxes
India has federal and state structures to levy indirect taxes and
hence, has multiple indirect taxes. The Government is making
efforts to introduce a unified Goods and Services Tax (GST).
The key indirect taxes levied by the Central Government are
a customs duty, an excise duty and a service tax and a set of
mechanisms under the Central Value Added Tax (CENVAT)
regime. At the state level, the Government has transitioned to
a VAT regime (applicable on sale and deemed sale of goods)
from the earlier Sales Tax regime. Additionally, states levy
entertainment tax, entry tax and luxury tax. Some of the states
have delegated certain powers to local bodies to collect entry
tax, show tax and entertainment tax. Apart from this, the
Government provides various incentives to a goods and services
exporters in the form of import licenses, tax rebates and tax-
free imports.
• Service tax levied by the Central Government: More than
100 specified services are liable for service tax in India.
Most M&E services, such as broadcasting, advertising, sale
of advertisement space or time, subscriptions, temporary
transfer of intangibles, sponsorships, postproduction,
photography and event rights, are subjected to a unified
tax of 10.3%. Traditionally, service tax was payable on a
cash basis. However, recently, the Central Government has
issued Point of Taxation Rules (POT) to shift tax liability
on invoicing (if invoiced within 14 days of completion)
or receipt, whichever is earlier. Export rules have been
framed to allow service providers to grant an exemption
from tax and allow a refund of input tax paid. Similarly,
import of taxable services (including recharges) is subject
to tax under reverse charge. Service providers are eligible
for exemption from certain taxes levied by the Central
Government. However, state taxes paid by service
providers are generally an additional cost. Over the years,
compliance with service tax law has become complicated
and the Government has introduced prosecution provisions
for certain defaults. Service tax has always provided
an opportunity to service providers to structure their
operations to maximize tax benefits.
• Entertainment tax levied by state and local governments:
State and local governments levy entertainment tax
on various entertainment and amusement activities.
Traditionally, film exhibition, cable and DTH subscriptions,
video games, amusement parks and events have
been subject to entertainment tax. Some of the states
are considering entertainment provided through
telecommunications and the internet to be subject to
entertainment tax. Entertainment tax rates are fairly
high as compared to taxes levied on other luxury goods
and services. For example, the entertainment tax rate for
movie exhibition in Mumbai is as high as 45% while the
same movie sold on a DVD is liable to a 20% tax rate. Most
of the states offer entertainment tax exemptions to new
multiplexes, sporting events and certain films subject to
specific conditions.
37. 34Spotlight on India’s entertainment economy
• VAT/sales tax levied by state governments: Each state
government in India levies VAT on sale or deemed sale
of goods in its respective state. Central Sales Tax (CST),
which is levied for interstate transactions, is collected and
administered by the originating state. VAT varies between
12.5% to 15% across different states; and a lower rate,
between 4% to 5%, is applied on certain goods (including
intangibles, video compact discs and DVDs). Certain
essential goods (including books) have been exempted
from VAT. Generally, setoff is available on VAT paid on
procurements within the state. VAT is also applicable on
transfer of intangibles (either temporary or permanent)
such as copyrights, trademarks, franchise rights and
patents at a rate of 4% to 5%. VAT exemption is available in
certain states for the temporary transfer of copyrights in
films meant for theatrical distribution.
• Central excise duty levied by the Central Government:
Excise duty is applicable on the manufacture of goods within
India and is payable by the manufacturer. Most products
attract a uniform rate of 10.3%. Excise duty is generally
levied as a percentage of value of goods manufactured
and cleared from the factory. Exemption to excise duty is
available if units are set up in specified areas. Standard or
lower rates are applicable to goods used by the M&E sector.
• Customs duty levied by the Central Government: Customs
duty is levied on the import and export of goods into India
under the Customs Act 1962. The present effective rate
of customs duty is 26.85%. However, the Government has
granted certain exemptions to imports relating to the M&E
industry:
• Temporary period import of equipment by a foreign film
unit to shoot a film in India
• Newsprint (uncoated and coated paper used for printing
of newspaper and periodicals)
• Royalty paid on import of films, music, gaming software
on specified media
• Digital high-end projects relating to DTH operations
• Goods and Services Tax (GST): It is proposed that the
current indirect tax regime in India be replaced by a
comprehensive dual GST to be levied concurrently by the
Central Government (CGST) and the state governments
(SGST). In order to introduce GST, certain constitutional
amendments are required to provide powers to the Central
and state governments to tax the supply of goods and
services. The draft constitutional amendment bill (now in
Parliament) seeks to subsume the following taxes:
• Union levies:
• Central excise duty and other specified excise duties
• Taxes on newspapers and advertisements
• Taxes on services
• State levies:
• Entry tax (not levied by local bodies)
• Taxes on sale and purchase of goods
• Taxes on advertisements
• Taxes on entertainment, betting and gambling (not
levied by local bodies)
The new tax structure will have a significant impact on all
aspects of business in India. However, many of the design
features of the GST have yet to be finalized and are being
discussed at the central and state level.
38. Spotlight on India’s entertainment economy35
India’s growing middle class, rising disposable
incomes, high volume of content consumption and
conducive regulatory environment hold significant
potential for foreign investments across all segments
of the M&E industry. Digital adoption, at a tipping
point due to wireless broadband availability, will
create additional opportunities for global companies
to cater to a new generation of digital consumers.
As global M&E companies start to compete again for
growth opportunities globally, there is an increasing
sense of urgency to capture the opportunities
offered by the Indian market.
In order to succeed in India, it is necessary for
companies to understand and adapt to economic and
cultural nuances and invest in content and services
tailored for the local market. Global companies need
to thoroughly assess the market and distribution
channels to price content appropriately and adopt
different strategies to serve the several internal
markets that exist in the country. While M&E
companies operating in emerging markets like
India continue to be exposed to risks ranging from
local competition, fraud, corruption and piracy,
ongoing structural and regulatory reforms and the
development of corporate governance norms will
mitigate these threats.
Conclusion