India, an emerging economy, has witnessed unprecedented levels of economic expansion, along with countries like China, Russia, Mexico and Brazil. India, being a cost effective and labor intensive economy, has benefited immensely from outsourcing of work from developed countries, and a strong manufacturing and export oriented industrial framework. With the economic pace picking up, global commodity prices have staged a comeback from their lows and global trade has also seen healthy growth over the last two years.
CPI- per capita incomeGDP – gross domestic product
Content• Bollywood• Indian economy• Economic aspects of Bollywood• Leading players in the industry• Economic growth of the industry in the last 5 years• Movies that contributed to the growth• Comparison with other regional movie industries• Impact of Bollywood on other industries• Reason for the high rate of investment into the industry• Impact of recession on the industry• Benefits to government• Conclusion
Bollywood• Popularly known as Hindi film industry.• Based in Mumbai, Maharashtra.• Originated in 1913.• Term coined in 1970’s, inspired by Tollywood, theBengali film industry.• Often used to refer to the whole Indian filmindustry.• Unlike Hollywood it does not have a physicalexistence.
Indian film industry facts and figures• Over 250 films are censored or released each year inBollywood.• Hindi film industry is the largest film industry in India, interms of the ticket sales and the number of film producedannually.• 20 million people go to movies on daily basis and pay theequivalent to average Indians days wages.• The Central Board of Film Certification cites on its web sitethat every 3 months as audience as large as billionspopulation visits cinema halls.
Indian EconomyCharacteristics:Mixed economy.Both Govt. and private sector have influenceover the economy.Liberalized economy.Labour intensive.Low level of income and capital formation.Low order of resource utilization.
• Considered as a low income country by WorldBank,with the Gross National Income of US$549.• Great inequality in the distribution of wealth:the richest tenth of households hold 33% ofwealth, while the poorest tenth only hold 3%.• 86% of the population lives under $2 per day;44% lives under $1 per day.
India’s economic projections• Source: report from Federation of Indian Chamber of Commerce and Industry, NewDelhi dated September, 20102008 2009 2010GDP growth 7.30% 5.40% 7.60%CPI growth 9.30% 5.50% 4.90%
• The Rs.130-billion ($2.85 billion) industry is one of the fastgrowing sectors in the country with expanding globalreach.• Approximately 250 movies are produced each year,ranging from budget of $200,000 to $50,00,000.• During the last decade, exports have grown from Rs.100million ($2.18 million) to Rs.1.5 billion ($32.85 million).• The industry is expected to grow at the rate of 19 percentand reach a turnover of over Rs.260 billion ($5.7 billion) by2011.• Provides employment to more than 1,75,000 people. Hasemployment generating capacity of nearly 35,000 peryear.
• In the year 2009 , 27% of the money invested in theindustry was from NRIs and it rose to 31% this year.• Recently, the Govt has diluted the restrictionsregarding FDI into the media and entertainment,which allows the NRIs to pool in funds intoBollywood.• The industry makes an annual income of more thanUS$500 billion a year approximately.• The industry is growing at the rate of 11.2% per year.
Yashraj Films• Yash Chopra- MD• Aditya Chopra- CEO• Highest grosser in the entertainment business.• Collectively, 8 of the recent YRF productions havegrossed in excess of 200 Million US Dollars worldwide.• Produces almost 5 movies a year, budget ranging from40 crores – 90 crores.• Employs more than 35000 people ranging fromtechnicians to junior artist and flimstars.
Red Chillies Production• Owners – Shah Rukh Khan and Gauri Khan.• Recent collaboration with Dharma productions.• Also into advertisement and television industries.• Produces 3 movies on an average per year,ranging from30 crores– 75 crores.• Have earned a revenue of US$ 160 million fromUSA, UK and UAE, in 2009-2010.• Employs nearly 19,000 people.
Eros International• Owner - Komal Nahta• Have a strong hold on the overseas markets ofUSA and UAE.• Produces 5 movies on an average each year,10 crore – 50 crore .• Have earned a revenue of US$ 135 million fromUSA and UAE, in 2009-2010.• Employs nearly 14,000 people on temporarybasis.
UTV Movies• Chairman –Naresh Chandra• Concentrates on only small and mediumbudget films, ranging from 2.5 crores – 10crores .• Popular mostly in south- east Asia and UAE.• Have earned a revenue of US$ 105 millionfrom overseas trade, in 2009-2010.• Employs nearly 9,000 people .
Shree AshtavinayakCinevision Pvt. Ltd• Chairman & MD- Dhilin H. Mehta• Board of directors –Ms.Seema D. Kar, Mr. Amit A.Behl, Mr. Kiran B. Mistry.• Don’t have a strong hold on the overseas markets .Popular mostly in south- east Asia.• Produces 5 movies on an average each year,10 crores– 45 crores.• Have earned a revenue of US$ 95 million from overseastrade, in 2009-2010.• Employs nearly 11,000 people on temporary basis.
Growth of the industry in the last5 years, 2005-2010
Year No. of filmsproducedFDI AnnualinvestmentRevenueearned2006 284 11% m960 crore US$235billion2007 249 17% m840 crore US$340 billion2008 273 20% m875 crore US$317 billion2009 241 27% m985 crore US$475 billion2010 235 31% m1060 crore ---------Source- report from Research institute of media planning and management,August’2010
• Fastest growing industry in India.• Contributes 29% to the growth of Indian economy.• Expected to be the largest contributors of growth inIndia.• Industry is attracting more and more FDI.• Annual investment is increasing at a rapid rate.
Recent movies that added to therevenue of the industry
Top five highest-grossing Bollywoodfilms in IndiaRank Movie Year Studio(s)Net Gross(accordingto BOI)Net Gross(accordingto IBOS)1 3 Idiots 2009VinodChopraProductionsRs.202,57,00,000Rs.189,38,74,7292 Dabangg 2010Arbaaz KhanProductionsRs.140,00,00,000Rs.142,48,31,0003 Ghajini 2008 Geetha ArtsRs.114,67,00,000Rs.117,48,22,7564 Raajneeti 2010Prakash JhaProductions/UTV MotionPicturesRs.92,93,00,000Rs.94,89,66,3165Rab Ne BanaDi Jodi2008Yash RajFilmsRs.86,78,00,000Rs.73,52,37,848
Comparison with other regionalmovie industries
Other film industries in India• Tollywood (Bengali)• Tollywood (telugu)• Lolywood (lucknow)• Ollywood (orissa)• Kollywood (tamil nadu)• Sandalwood (kannada)• Bhojpuri film industry
Tollywood• The Bengali film industry.• Approximately 160 movies are produced each year,ranging from budget of $20,000 to $3,00,000.• Provides employment to more than 65,000 people. Hasemployment generating capacity of nearly 1500 peryear.• There has not been any contribution to the industrythrough FDI.
• The industry makes an annual income of morethanUS$60 million a year approximately.• The industry is growing at the rate of 7.2% peryear.• Annual income of the industry adds to only 4%of the growth of Indian economy.
Mollywood• The Malayalam film industry film industry.• Approximately 90 movies are produced each year,ranging from budget of $200,000 to $50,00,000.• Provides employment to more than 35,000 people. Hasemployment generating capacity of nearly 1100 peryear.• There has been contribution to the industry throughFDI.
• The industry makes an annual income of morethanUS$110 million a year approximately.• The industry is growing at the rate of 6.4% peryear.• Annual income of the industry adds to only 7%of the growth of Indian economy.
Telugu film industry• Approximately 100 movies are produced eachyear, ranging from budget of $70,000 to $9,00,000.• Provides employment to more than 30,000 people. Hasemployment generating capacity of nearly 1000 peryear approximately.• There has been 11% contribution to the industrythrough FDI.
• The industry makes an annual income of morethanUS$90 million a year approximately.• The industry is growing at the rate of 7.8% peryear.• Annual income of the industry adds to only 3% ofthe growth of Indian economy.
Bhojpuri film industry• Approximately 75 movies are produced each year,ranging from budget of $30,000 to $2,00,000.• Provides employment to more than 32,000people. Has employment generating capacity ofnearly 1700 per year approximately.• There has been no contribution to the industrythrough FDI.
• The industry makes an annual income ofmore thanUS$15 million a year approximately.• The industry is growing at the rate of 4.7%per year.• Annual income of the industry adds to only2% of the growth of Indian economy.
Ollywood• Approximately 60 movies are produced each year,ranging from budget of $60,000 to $2,00,000.• Provides employment to more than 15,000people. Has employment generating capacity ofnearly 2000 per year approximately.• There has been no contribution to the industrythrough FDI.
• The industry makes an annual income of morethanUS$9 million a year approximately.• The industry is growing at the rate of 5.2% peryear.• Annual income of the industry adds to only 1.7%of the growth of Indian economy
Comparison with BollywoodNo. of filmsproducedGrowth rateof theindustry in %Annual FDI in%% of incomeadded toIndianeconomy(approx.)Bollywood 250 11.2 31 9.2Tollywood 160 7.2 No 4Ollywood 60 4.7 No 2Telugu filmindustry100 7.8 11 3Bhojpuri 75 5.2 No 1.7Mollywood 90 6.4 Yes 7
Comparison with Bollywood050100150200250300% of incomeadded toindianeconomy%growth rateof theindustry
Music industry• Almost 70% of the Indian music industry depends onBollywood.• Bollywood is responsible for pooling in almost 75% ofrevenue earned annually.• The potential of the Indian music industry can be betterunderstood from its size estimated at around US$ 182.9million in 2010, up from US$ 160.9 million in2008, portraying a growth of 14 per cent during thereporting period. It is expected to grow at a CAGR of 16 %over 2010-14 to reach US$ 379.1 million.
Media and advertisement• The Indian Media and advertisement (M&A) industry stood at US$12.9 billion in 2009 registering a 1.4 per cent growth over last year.• According to a joint report by KPMG and an industry chamber. Overthe next five years, the industry is projected to grow at a compoundannual growth rate (CAGR) of 13 per cent to reach the size of US$24.04 billion by 2014.• The report stated. Additionally, the gaming segment is expected tobe the fastest growing sector in the M&A industry. The sectorshowed a 22 per cent growth in 2009 and is expected to grow at aCAGR of 32 per cent to reach US$ 705.2 million by 2014
Other Industries• Apparels industry• Disc producing• Prop industry• Tourism industry• Recreational industry• Television industry
• Less regulations in Foreign Direct Investment.• Increased demand for the Bollywood movies inIndia as well as in abroad.• Awesome turnovers from the recent movies.• Withdrawal of recession.Reason for the high rate ofinvestment into the industry
Effect of recession on the industry• The total revenue that Bollywood earned in 2008was R10,900 crore with an overseas collection ofr977 crore.• The overseas box office also saw a major drop of 30per cent with a cut down in the film going audience.• KPMG has estimated that the domestic box officerevenue in 2009 will be around R7,880 crore ascompared to m 8.020 crore in 2008, thus bearing aloss of about a 100 crore
Consumer preferences• Multiplex• Theater• Home viewing- DTH services & DVD, CDscopyright• Internet , Pirated CDs
Entertainment tax• One of the highest revenue earning sectors fromtax in entertainment industry is cinema.• The entertainment tax department collects thetax from the sponsors and deposit it to theGovernment of India.• Entertainment tax in all states of India is 15%-20%, except Maharashtra and UP, where it is25%-30%.• The government receives 37% of the totalentertainment tax from Bollywood.
Corporate tax from the productionhouses• Indian government receives a corporate tax of30% from the industry.• If the taxable income is more than 1 million, asurcharge of 10% of income tax is levied onthe company.
Contribution to GDP• The present GDP rate is 7.60% and wants toattain 9% by 2010.• The Bollywood industry added to 19% of thetotal GDP of the country in 2009 and isexpected to contribute 22% of the GDP in2010.
Conclusion• Bollywood affects the Indian economy beyondlimits. It’s proving itself to be ahead of thecurve both politically and socially . It haspushed viewers to address issues ofcommunal relations and religious intolerancewithin India. Bollywood has asserted itself as apopular vehicle for discussion , reflection andsocial change.