Bangalore: Anirights Infomedia Pvt. Ltd, a two-year-old animation start-up, creates content aimed at Indian audiences. But in doing so, complains its founder-chief executive Ashish Kulkarni, the company is missing out on tax and other fiscal incentives available to animation firms that render work for US and UK producers.
Outsourced work from Hollywood studios accounts for less than 15% of the work done at Aniright Infomedia, making it ineligible for service tax exemptions or custom duty waivers on imports of expensive equipment offered to studios that export more than 85% of their work.
Indian laws that give preferential tax treatment to exports of such services should be tweaked to include work rendered for local clients, say industry insiders, because India-focused content will soon make for a sizeable chunk of the animation industry’s revenues. More than a third of the Rs2,900 crore revenues by 2011 from animation work rendered in India will be for local clients, according to trade body Federation of Indian Chambers of Commerce and Industry or Ficci.
“After a decade of working on outsourced projects for Hollywood studios, Indian animators are now ready to create local content for Indian viewers,” says Kulkarni, a 12-year veteran in the field of animation. “(But) The current tax system actually discourages studios from creating IP (intellectual property)-driven content for the local market.”
The Indian animation industry, estimated at about Rs1,100 crore today, is predicted to grow at a compound 22% in the next five years. In the past, much of the growth in the sector has been powered by outsourced work for large Hollywood studios with Indian animation and computer graphics firms contributing to blockbusters such as Star Wars, Stuart Little and Turtle Island.
But that is beginning to change with growing demand for local content. By 2011, according to Ficci estimates, the domestic market for animated television serials and films will reach Rs1,000 crore.
Original content, which draws on India’s tradition of mythology and folklore, is aimed at the country’s 330 million children. Animated feature films slated to hit theatres soon include Hanuman 2—produced by Percept Picture Company, a division of Percept Holdings Pvt. Ltd, and Toonz Animation India Pvt. Ltd—and Geet Mahabharat, being developed by Toonz and Impact Vision, a Mumbai-based production house.
Anirights Infomedia will also launch Little Krishna, an animated movie it is producing in tandem with the India Heritage Foundation, part of Iskcon (short for International Society for Krishna Consciousness).
Over the next four years, the market for fully animated movies in India is likely to grow from Rs65 crore to Rs340 crore, predicts Ficci.
“With such a huge demand for original content, animation studios that focus on the Indian market should receive the same benefits as those offered to studios that focus on outsourced work,” says Amita Sarkar, head of entertainment division at Ficci.