Trump's latest tariff shock promises a horror show for Indian movies

US President Donald Trump on Monday reiterated his plan to impose 100% tariffs on all films made outside the country, which could spell disaster for Indian films that depend on diaspora fans for a significant portion of their revenue.

The US, apart from the UK, is a key overseas market for Indian movies, particularly Hindi, Tamil, Telugu and Malayalam films. These two markets account for about 50% of overseas collections thanks to the widespread Indian diaspora.

Writing on Truth Social on Monday, Trump said: “Our movie making business has been stolen from the United States of America, by other countries, just like stealing candy from a baby."

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“Overall, the new US trade measures could significantly disrupt global media companies operating in India by sharply increasing costs through tariffs on exported content and compliance burdens on digital transfers. This may push these companies to fundamentally reshape content production and distribution strategies, potentially affecting profitability, content availability, and pricing for consumers," said Dulles Krishnan, vice-president, GTM (go-to-market) - India, Avalara, a company that delivers cloud-based compliance solutions for various transaction taxes.

Impact on OTT platforms and podcasts

Major OTT players and international studios like Netflix, Amazon Prime Video, Warner Bros and others that produce and export Indian originals or use Indian vendors for visual effects (VFX), animation, post-production, or content formatting are faced with a cost spiral unless they relocate movie-production to the US.

Other than video content, podcasts, which encounter nuanced tax treatments based on format and distribution channels, are also likely to be affected, Krishnan said. Audio-only podcasts produced in India and distributed through US platforms like Spotify or Apple Podcasts typically generate revenue through subscription fees and advertising.

Subscription revenue often benefits from favourable tax treatment as business profits under Article 7 of the India-US Double Taxation Avoidance Treaty, provided the Indian entity does not have a US permanent establishment. However, advertising revenue, especially when specifically targeted at US listeners, frequently triggers complex sourcing rules, potentially creating taxable US-source income, Krishnan said.

Legal, tax hurdles and deal restructuring

To be sure, tariff changes will almost certainly lead to more back-and-forth in deal structuring, along with heightened documentation and legal review cycles. For content creators and production houses in India, this means navigating a more complex transactional environment where every deal with a foreign platform or distributor requires careful legal vetting to manage exposure to tariffs, tax liabilities, and regulatory risks.

“This may force a re-evaluation of greenlighting certain projects, especially mid-budget titles that rely on international streaming revenues to break even. This could prompt a shift in content strategy where fewer riskier, locally-driven titles are commissioned, or there is a stronger push to produce in partnership with US entities to avoid the tariff," Gaurav Sahay, founder partner at Arthashastra Legal, pointed out.

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A senior executive at a foreign streaming platform said that budgeting would need to factor in this extra layer of cost, which could either compress margins or lead to increased subscription prices over time. Smaller production houses and independent creators may also feel the impact, as platforms might redirect resources toward projects that are more likely to be tariff-compliant or yield higher global returns, this executive said.

“There is a real chance that direct licensing of digital content—such as podcasts, video series, or online IP—to US platforms could be classified as service income under US tax rules. This classification could attract withholding tax and create dual compliance obligations under US and Indian tax laws," said Zubin Morris, partner, Little & Co. For Indian creators, this means navigating treaty benefits under the India–U.S. Double Taxation Avoidance Agreement (DTAA) and possibly filing US tax returns.

A viable workaround is to route such deals through a US-incorporated subsidiary or enter into structured licensing arrangements that optimize tax efficiency. Legal clarity in contracts and professional tax advisory will be essential to stay compliant and commercially viable, experts like Morris said.

Long-term impact and adaptation

Given the unpredictability of the tariff situation, one can expect that existing contracts will be revisited and new contracts drawn to account for this new unpredictability, according to Russell A. Stamets, partner, Circle of Counsels, a Delhi-based law firm. This is perfectly normal, more like a currency fluctuation situation than it is a major re-think about how to do business, he said.

This, however, could have a ripple effect on content production over time, according to some. Tanu Banerjee, partner at Khaitan & Co, emphasized that while tariffs may temporarily slow down India’s export momentum, especially for diaspora-focused content, there could be a pivot towards co-productions, staggered release models, and increased legal and tax structuring to stay globally competitive.

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“Increased costs and complexities could deter foreign investment in Indian content production, slowing the growth of the Indian media and entertainment industry. Platforms may also start prioritizing content for domestic consumption, reducing the focus on US releases," said Anupam Shukla, partner, Pioneer Legal.