India moves to attract venture funding in entertainment sector

Monday, 10 November 2003, 20:30 IST
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NEW DELHI: India's entertainment sector powered by Bollywood, the money-spinning Hindi film industry, may soon see an inflow of hitherto elusive venture capital. Impressed by the achievements of the Indian entertainment sector globally, the government has finally decided to set up a high-level committee to look at the international practices and systems related to venture capital funding. "The committee will explore ways of facilitating and expediting flow of venture funding into the Indian entertainment sector. It will submit its report to the information and broadcasting ministry in six months," said an official source. "The committee will have representations from the government as well as the entertainment industry," the source told IANS. "We expect a huge response from venture capitalists in the Indian entertainment industry due to its increasingly global profile. It would be a win-win situation for venture capitalists as well as the entertainment industry." The committee would study the existing investment regime in order to identify areas for policy changes and suggest a roadmap outlining a strategy to facilitate venture funding. The government conferred industry status upon Bollywood in 2001, making it eligible for institutional financing. But so far very few banks have sanctioned funds to the film industry, mainly due to lack of security or collateral. India's film producers have for years borrowed money from business associates and moneylenders with dubious links. As the underworld took control, it demanded global rights to films and interfered with casting. Indian studios churn out nearly 1,000 movies a year and take in almost $850 million in box office revenues, peanuts by Hollywood standards, but huge money in the subcontinent. Indian movies are exported to the Middle East, Britain and North America, all of which have sizable South Asian populations. They are also played at theatres and on television channels in countries from Pakistan to Indonesia. The official said the high-power committee, headed by Planning Commission member N.K. Singh, would strive to increase the flow of "clean capital" into the entertainment industry. Other members of the committee include Pawan Chopra, secretary in the information and broadcasting ministry, Vinod Rai, additional secretary in the department of banking, and K.V. Kamath, chairman and managing director of ICICI. Ace filmmakers Subhash Ghai, Shekhar Kapoor and Sandeep Bedi will be among those who will represent the entertainment sector in the committee. "The government has taken a series of measures in recent years to encourage the film industry to corporatise itself. We have already declared the entertainment industry a high-priority growth area," said the official. "The setting up of the committee is a major step towards boosting the entertainment industry and help them attract institutional funding easily. This will definitely further improve the prospects of the industry in the global market." An Oscar nomination for "Lagaan" and a place in the foreign films category at the British Academy of Film and Television Awards for classical "Devdas" last year have given Hindi-language cinema a new visibility in the West. Global consultancy major KPMG has projected a 20 percent plus compounded annual growth rate for the Indian entertainment industry till 2007, which would take its revenues to 419 billion.
Source: IANS
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