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Big Budget Boost to India’s AVGC Sector

admin   February 1, 2022

The Budget announcement of the formation of Task Force for AVGC Promotion has come after years of efforts put in by the industry stakeholders who see the sector contributing significantly to the Indian economy

In a major boost to AVGC sector, Finance Minister Nirmala Sitharaman has announced to set up a task force for Animation, Visual Effects, Gaming, and Comics (AVGC) sector with an aim to develop world-class creative talent to serve domestic as well as global demand.

“The Animation, Visual Effects, Gaming, and Comics (AVGC) task force will be set up to build domestic capacity to serve our markets and global demand,” said Nirmala Sitharaman in her Budget speech for the financial year 2022-2023.

In the past couple of years the AVGC industry stakeholders had been vocal in demanding the government to create an AVGC taskforce and AVGC Skills Council given the sector’s immense potential in creating jobs and making significant contribution to the Indian economy. The two editions of CII Global Summit FX in 2020 and 2021 have created a framework and recommendations for AVGC Sector, going forward.

“Delighted that the Government of India has accepted our request to set up an AVGC task force to provide strategic direction and provide a fillip to the sector. Thanks to @MIB and the @CII for their encouragement of this initiative. I shall work to ensure that we partner the government to achieve exponential growth in revenues, jobs and global market share,” said Biren Ghose, Chairman, CII National AVGC Committee 2022 & Country Head Technicolor India. 

“I think what is really important now is that we are moving towards a new experience economy. We have young people who are tuning into our content. I think they are going to experience some things that are even beyond conventional storytelling. Education too has changed forever. I believe that the tools and technologies, practices and protocols that we have created are going to influence every industry,” he said.

Biren Ghose believes that “technology has moved from being purely an enabler to storytelling to becoming very much center stage”. “The way in which India can innovate with digital technologies is going to put us in a really good position in the competition that’s going to happen between countries as we aspire to take market share on a global basis in the media and entertainment sector,” he said.

Saying that the Budget announcement of the formation of taskforce for AVGC Promotion has come at the most appropriate time, Ashish SK, Chairman, FICCI AVGC- XR Forum & Founder of PUNNARYUG ARTVISION PVT LTD, said that after setting a strong foundation in the last two decades the Indian AVGC – XR is poised to grow phenomenally in coming decade.

“The creative skills from India needs nurturing to a great extend to enable the growth of the AVGC – XR sector. Setting up of a task force for the promotion of Indian AVGC sector will definitely bring in a great focus on positioning Indian AVGC sector for services exports, co-productions, growth of Indigenous intellectual property and its consumption patterns within India and overseas,” he added.

He observed that the Indian AVGC – XR sector is expected to have a major share of the media and entertainment industry. “The horizon & use cases of AVGC – XR verticals have expanded beyond its day to day defined utility in Architecture, Life Science, Legal, Education, Industrial, Urban Planning, Sports, Digital universe, Metaverse etc apart from media &entertainment,” said the Founder of PUNNARYUG ARTVISION PVT LTD.

The AVGC industry has thanked Anurag Singh Thakur, Union Minister of Information & Broadcasting , for his unconditional support and belief in the AVCG sector as the champion of Atmanirbhar Bharat. “If we could tell stories that project new India and its products through our media, it will support our allied industries and sectors,” Anuraag Thakur had said.

He also added that he believed India has the potential to create “creative incubators that identify and groom talent in graphic design, sound animation and visual effects,” and capture its fair share of global visual effects, animations, graphics and sound market.

Chandrajit Banerjee, Director General, CII, believes that the AVGC sector holds great potential in contributing towards India’s 5-trillion dollar economy target. “The sector can really double its growth rate and easily become about a trillion rupees sector by 2025. And the amount of jobs it can create is such a powerful tool. We can easily create about 2.5 million additional jobs, making it one of the most important and exciting sunrise sectors to nurture,” he said.

Rajan Navani, Chairman, CII’s India@ 75 Council and Vice Chairman and Managing Director, Jet Line Group of Companies, said that Indian AVGC sector grew at a fast pace during the pandemic, as “we have a strong 300 million Gen Z population that probably no other country has”.

He added that India has now positioned itself for being able to be a part of the explosive growth. “eSports, where we look at professional sports gamers, is an area that is increasingly becoming popular around the world. It’s a very unique confluence of technology, youth culture, social networking, entertainment, community, sportsmanship, sports, entertainment, all coming together,” he observed.

According to K Madhavan, Chairman, CII National Committee on Media and Entertainment and Country Manager & President The Walt Disney Company India & Star India, the goal of India’s media and entertainment industry is to reach $100 billion by 2030. “The growth target remains ambitious but not difficult to achieve, provided we get the right support from policymakers and the government. India already produces 160,000 hours of content every year, which is the highest in the world. We’ll see the demand for original content to grow every day and more and more consumers getting access to the internet in tier-2 and tier-3 cities.”

Madhavan said that there has to be a clear cut roadmap for AVGC exports, creating global b2b opportunities, encouraging increasing convergence initiative between creators and tech innovators, and distribution hubs. 

Addressing the CII SummitFX 2021 – Global AVGC and Immersive Media Summit, Piyush Goyal, Union Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution, and Textiles had highlighted that the AVGC sector is growing at 9% and is expected to reach ~Rs 3 lakh crore (US$ 43.93 bn) by 2024 (at a CAGR of 13.5%).

“AVGC is truly one area which has India’s creative talent at its very best. India’s agility and resilience that you have already demonstrated in the last 16-17 months through the COVID period has shown to the world that we are a trusted partner,” the minister said.

He said in the Spirit of “Local goes Global: Make in India for the world”, AVGC sector must look beyond boundaries to reach new horizons.

When we look at various areas of value creation in the Indian M&E sector, the AVGC sector stands out owing to its great potential in taking India’s M&E story to the next level, said Apurva Chandra, Secretary, Ministry of Information and Broadcasting, while speaking at the 10th edition of CII Big Picture Summit  2021. He also announced that the government was working towards creating a National Centre of Excellence for AVGC to provide a major boost for further development of the sector in India.

“AVGC is no longer a sunrise sector. The sun has already risen in the AVGC sector,” said Neerja Sekhar, Additional Secretary, Ministry of Information & Broadcasting, as she highlighted that the National Centre of Excellence for AVGC is a unique project where the industry needs to work together with the government to make it a success.

As per a report on Indian M&E sector released during the CII Big Picture Summit 2021 by the Boston Consulting Group India, VFX and Gaming can be the next IT-BPM boom and play a fundamental role in India’s M&E by 2030 with potential to create 75,000-120,000 direct and indirect jobs if India scales up its AVGC sector through structural interventions.

The Indian audiovisual sector is also a champion sector recognized by the Government of India. The Ministry of Commerce and Industry has identified this sector as a high potential for increasing job creation and export earnings for India. It was forecasted that the industry could create 2-3x growth in jobs over 4 years. Incentive packages and innovative forms of new fast-tracked education for skill sets were being discussed.

More than 70 per cent of the AVGC revenues comes from AVGC services to the global markets. The AVGC sector in India is poised to drive a similar growth to what the IT industry saw 20 years ago. Audiovisual exports in the next five to 10 years will be amongst the top 5 sectors contributing to the Indian GDP.


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CII Seeks Industry Status for M&E in Union Budget

admin   January 7, 2021

The Media and Entertainment sector, through the Confederation of Indian Industry (CII), has sought industry status for itself and infrastructure status for broadcasting, ahead of the Union Budget 2021 to be presented by the Finance Minister on February 1.

The M&E sector has been growing at an estimated gross annual rate of around 13.5% for the past several years and has shown the potential to reach $100 billion by 2030. But despite being one of the top revenue earners for the government and having expanded India’s soft power reach globally, the sector has been conspicuously absent from the list of focus sectors in the Union Budgets for over two decades now.

However, in the wake of Covid-19 pandemic, the M&E sector has been grappling with multiple problems owing to the economic lockdown and social distancing restrictions put in place. Now, through the CII, the sector has come up with a Pre-Budget Memorandum 2021-22 that recommends a number of changes to help it stand back on its feet.

“The sector has been growing at a gross annual rate of 13.5% for the past several years and has the potential to provide millions of jobs and boost India’s export performance. Getting industry status will help the sector get cohesive policies, special schemes and subsidies,” says the pre-budget memorandum.

It also adds that infrastructure status for broadcasting would give it the much needed support to get access to funds at a lower rate for laying cables, and building and maintenance of towers.

Under the direct tax recommendations, CII has sought a change in withholding on royalty payments towards non-theatrical rights. It said that non-theatrical rights of films such as those for digital and satellite platforms are currently subject to a 10% tax. The industry body is of the view that the rate of withholding tax on domestic royalty payments towards non-theatrical rights be brought down to 2% on a par with what is levied on earnings from sale, distribution and exhibition of cinematographic films. “This would come as a huge respite to the industry, particularly for small production houses, by addressing their cashflow issues for working capital requirement,” the pre-budget memorandum says.

“There is a huge shift in viewer preferences and the use of technology for consuming cinematographic films. A lot of films are directly released on satellite or digital platforms, which are becoming the more popular medium of content consumption among viewers. With the advent of technology and its fast growing pace, making a distinction between the medium is not in line with the current trend of consumption,” the memorandum adds.

Further, under its GST recommendations, the industry body has sought an alternative payment mode for discharging GST liability under Reverse Charge Mechanism (by way of utilizing ITC also). The rationale behind the proposed change, it says would address the problem of huge piling up of ITC in media service industry and resolve cash crunch. “Since credit ledger is already allowed for payment of output liability, extending the same for even RCM liability is a small favour to the entire business community in India in these stressed times,” the industry body urged the government.

The industry also wants removal of interest payable whilst reversing ITC availed, from Vendors whose invoices aren’t paid within six months. Citing the 28th GST Council meeting, held on 21st July 2018, which agreed to industry’s representation, the memorandum says, “By delaying the payment to the Vendor, the revenue has not been deprived of its tax due, as the Vendor has already deposited the tax to the Government. While the control to ensure bogus invoices aren’t in vogue is understandable, it is not just to demand further interest also from the recipient, after having got the taxes already from the Vendor.”

To eliminate the cascading effect of tax and thus reduce the tax burden on the end consumer, CII has recommended removal of sponsorship services from the list of services to attract GST under reverse charge mechanism (‘RCM’). Suggesting three alternatives to this change, the industry body says that either sponsorship services should be covered under forward charge “which will allow taxpayers to avail full credit of tax paid on procurements”, or sponsorship services provided by body corporate or partnership firm should be excluded from RCM. As a third alternative, “supplies made which are covered under RCM should be excluded from the value of exempted supply for the purpose of reversal of input tax credit,” says the memorandum.

It further adds that allowing GST input credit on certain regular business expenses like renting or hiring of motor vehicles used for business purposes or food and beverage purchased and outdoor catering services availed during the production of television content and movies will help bring down business expenses for TV programme producers, broadcasters & movie makers and be helpful mostly in case of in-house production. “Amount paid to makeup artist is part of giving creative life to a character in the content which is very important. Please remove the blocked credit for this industry for these items,” it says.

The industry also seeks an increase in the time limit of 24 hours for generating IRN on the NIC portal to 96 hours “for businesses to sufficiently comply with relevant provisions”.

Another issue, CII points out, is that credit notes after a merger or amalgamation is consummated, which is “causing business cost since the credit note with GST is not something the tax payer can upload in the GST portal, which mandates mentioning of the GSTIN & Invoice Number against which the credit note is tagged to.” The industry suggests an update in this regard on the GSTN portal to allow the option to choose Amalgamation as a reason and report Credit notes against invoices raised on earlier GSTIN.

The industry has asked the government to consider as a part of relief package allowing a one year time from the end of the financial year to avail ITC, as the time line of 6 months from end of FY for availing input credit for a financial year is too short given the Covid situation.


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Indian Cinema’s Soft Power Misses the Mark in Nirmala Sitharaman’s Maiden Budget Speech

admin   July 9, 2019

India’s soft power was the spotlight of Finance Minister Nirmala Sitharaman’s maiden budget speech but India’s showbiz and films did not find a place in her speech on India’s growing soft power.

International Yoga Day was the focus of India’s soft power and she went on to mention that International Yoga Day gets celebrated on June 21 and yoga has been practiced in 192 countries.

The FM highlighted that artists in 40 countries sang Mahatma Gandhi’s bhajan “Vaishnav Jan To, Tene Kahiye Je”. “Bharat ko Jaano” quiz competition is not only a hot favorite of Non-Resident Indians but also foreign participants. Sitharaman also spoke about the mission to help traditional artisans and their products in global markets and expand global footprint.

In her speech, the Finance Minister also mentioned the development of a digital repository focusing solely on preservation of tribal cultural heritage — folk songs, photos, and videos regarding their evolution, place of origin, lifestyle, architecture, traditional art, folk dances and anthropological details of the tribes in India.

But it was puzzling why Indian cinema’s global footprint did not find a mention in the speech by Finance Minister as the country’s soft power.

There is a steady growth in the visibility, volume and cultural visibility of India — from Bollywood to Bhangra music. India has revolutionized in the production, distribution, and consumption of images and ideas.

Indian films are exported to over 35 global territories. China alone accounted for a $272 million box office collection for 10 Indian films in 2018.

The warm-up to any bilateral discussion or any business meeting with Indian corporates begins with an Indian film narrative.

Shah Rukh Khan is known to bring traffic to a halt in the streets of Berlin (during Berlinale). Aamir Khan is now officially the most famous international star in China. Even today, Rajinikanth is a cultural phenomenon in Japan, where local fans dubbed him ‘Dancing Maharajah”.


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Finance Minister Proposes FDI Norm Relaxation in Media

admin   July 9, 2019

Finance Minister Nirmala Sitharaman has proposed to further relax norms and open up foreign direct investment (FDI) in Media and AVGC (Animation, Visual effects, Gaming and Comics) sector in her maiden budget speech on Friday.

“I propose to further consolidate, the gains in order to make India more attractive FDI destination. The government will examine suggestions of further opening up of FDI in media, AVGC (Animation, Visual effects, Gaming and Comics) in consultation with stakeholders,” she said.

Already India is one the most liberal media markets in the world in foreign direct investment (FDI) for global companies to engage in business.

Currently, the government allows 26% FDI in publishing of newspapers and periodicals involved with news and current affairs through the approval route and 49% FDI in news channels.

While no rules have been framed for FDI in news and current affairs in digital media in India, indications are that government may spell out norms for permitting 26% or 49% for Streaming of news & current affairs through digital media.

It is not clear on what’s to come in FDI in AVGC (Animation, Visual effects, Gaming and Comics sector. The AVGC sector already enjoys 100 per cent FDI, although no rules have been forumlated for this sector.

MEDIA & ENTERTAINMENT SECTOR: CURRENT FDI NORMS

  • FDI in all film-related activities such as film financing, production, distribution, exhibition, marketing etc. is permitted up to 100% for all under the automatic route
  • 100% foreign direct investment (FDI) in the advertising sector through the automatic route
  • FDI up to 100% now permissible in broadcasting carriage services outlined in FDI Policy, viz., teleports, DTH, Cable Networks, Mobile TV and Headend-In-The-Sky – FDI up to 49% permissible under automatic route and above 49% under Government approval route
  • FDI up to 100% permissible under automatic route in case of up-linking of non-news and current affairs TV channels and down-linking of TV channels
  • FDI up to 100% is permitted in publishing/printing scientific and technical magazines, periodicals and journals
  • 100% FDI for General Entertainment Channels
  • FDI up to 49% permissible under Government route in case of terrestrial broadcasting FM (FM radio), up-linking of ‘news and current affairs’ TV channels
  • In the news and current affairs category, such as newspapers, FDI has been allowed up to 26% subject to certain conditions
  • Companies would require government approval for 49% FDI in news channels. But 100% foreign investment in non-news channels or entertainment broadcasters will be allowed through the automatic route