Q&A

Posted On August 2020

What do foreign investors need to know about the India’s Media and Entertainment Industry?

India is the fifth largest media and entertainment (M&E) market in the world. More than 1800 films are produced every year in various languages in India. The country has a large broadcasting and distribution industry, comprising of approximately 900 satellite TV channels, 6,000 Multi-system operators and 60,000 local cable operators.

Several initiatives have been announced by the government, or are in the pipeline, to boost the growth of the industry. Industry status to the film industry has already been granted for easy access to institutional finance. The government proposed a single window clearance system for shooting permissions to promote India as a location destination for foreign production houses.

Various states governments have also come out with initiatives - Maharashtra is allocating land for setting up the National Centre of Excellence for Animation, VFX, Gaming and Comics and Telangana is planning to set up an incubation centre for the animation and VFX industry.

The Indian M&E industry was valued at US$ 25 billion in 2019, and it is expected to reach US$ 34.8 billion by 2022.

What are key trends of India's media and entertainment sector?

India's media and entertainment sector is characterized by massive volume, rapid digital adoption, and significant growth potential across several key segments.

Segment	Key Statistics & Trends	Growth Drivers/Challenges
Film	Produces over 1,500 films/year. 2016 box office: US$2.1 billion (compared to US/Canada's US$11 billion).	Challenge: Low box office rates due to piracy and limited screen count (approx. 13,000 screens, mostly single-screen cinemas). Driver: Growing number of multiplexes; production companies are offsetting low box office by selling rights to 20+ subscription streaming sites.
Television	2017 industry value: US$9.7 billion (11.2% growth). Viewership rose 21% to 780 million in 2017. 183 million out of 286 million households own a TV (2017).	Driver: A growing middle class and urbanization are fueling new, first-time TV buyers. Growth is driven by General Entertainment Channels (GECs) and regional language content. Unlike industrialized nations, traditional TV is still thriving.
Gaming	2016 industry value: US$523 million, dominated by smartphone-based games. India was the 5th biggest downloader on Google Play (2016).	Challenge: Gamers are highly price sensitive and reluctant to pay for content (23 million paying users out of 150 million mobile gamers in 2015). Driver: Popularity of smartphone-friendly games with an easy learning curve and low data usage. Monetization focuses on advertising and audience aggregation.
Live Events	Predicted to exceed US$1.5 billion by FY 2020.	Driver: Rising disposable income and rapid urbanization are creating demand for diverse in-person entertainment. Digital Ticketing Apps (e.g., BookMyShow) are formalizing the previously unorganized industry, offering transparency and discovery.
Animation & VFX	2016 industry value: US$878 million (16.4% CAGR). Expected to reach US$1.9 billion by 2021.	Driver: India's IT ecosystem in hubs like Bangalore is used for cost-effective, high-quality production for both domestic and foreign content. High domestic receptivity to VFX-heavy entertainment (e.g., Baahubali 2).

What are the key drivers for growth of the industry in India?

• Rising income and evolving lifestyles have led to higher demand for aspirational products and services
• Number of internet users are expected to increase by about 40% to 800 million and number of smartphones users to double to 700 million by 2023
• Growing internet and smartphone penetration has boosted adaptation of online video viewing in India
• Policy Support, digitisation and ease of access to institutional finance
• Increased FDI liberalisation and tariff relaxations

Can you highlight the FDI limits pertaining to M&E industry in India?

The Government of India has supported M&E industry's growth by liberalising FDI limits in various segments:

• FDI in Direct-to-home (DTH) satellite and digital cable network raised from 74% to 100%.
• In movies, FDI up to 100% through the automatic route
• FDI investment up to 26% in an Indian firm dealing with publication of newspaper and periodicals
• FDI investment up to 26% in Indian editions of foreign magazines.
• FDI up to 100% in publications of scientific and technical magazines/ specialty journals/ periodicals
• 100% FDI allowed in Animation, gaming and VFX through automatic route

Which are the key regulatory agencies governing M&E industry in India?

Some of the important bodies regulating M&E industry in India are:

• Ministry of Information and Broadcasting

It is a nodal agency responsible for formulation and implementation of polices, framework, laws and regulations concerning broadcasting, information, films and press industry in India.

Some of the functions are – development of broadcasting and television, development and promotion of the film industry, sanctioning of film for public exhibition, and administration of the Cinematograph Act, 1952

• Central Board of Film Certification (CBFC or Censor Board)

CBFC examines films to determine whether a film is fit for public display in India. If found fit, then a certificate of exhibition with a rating described in the Cinematograph Act, 1952 is provided. All films and their promos, music videos, music albums and their promos, whether produced in India or abroad, need to be certified by the CBFC as suitable for unrestricted public exhibition in India prior to its telecast on television.

• Telecom Regulatory Authority of India (TRAI)

It regulates tariffs payable by subscribers of television channels and service providers in broadcasting sector, among other things.

The functions of TRAI are diverse - recommendatory (in respect of licensing), mandatory (fixation of tariffs) and judicial (disputes arising under Regulations between parties or against TRAI, heard by the Telecom Disputes Settlement and Appellate Tribunal)