We are not politicians, historians or judicial experts, so we will refrain from commenting on the right or wrong about the recent Padmavati controversy. But as students of business, we find the government apathy for media disconcerting, especially as we firmly believe that films can solve the biggest problem facing India right now — jobs.
In our opinion, Bollywood has the power to create one crore new jobs in the next decade. The reason lies in the unique nature of the industry, which apart from generating media jobs, also serves as a brand advertisement for India.
The green-shoots are there. The success of Baahubali 2: The Conclusion has led to a spike in exports, with 85% of the growth in $1 billion animation industry, being driven by overseas projects. And then there is Aamir Khan. For years, the Chinese media stereotyped India as unsafe and dirty. Owing to this, not only do the Chinese view India in a poor light but also prefer keeping India out of their holiday destinations. But Indian cinema is changing that.
The Chinese got introduced to Aamir Khan with 3 Idiots and PK and were hooked with Dangal. China is now interested in everything Bollywood — from partnership and distribution rights to Indian directors and writers. Dangal raked in more than $194 million in just two months of its release in China, or a significant 40 BP of India's trade deficit with China.
Also last year, Indo China joint production, Kung Fu Yoga, was one of the most successful films at the Chinese box office, earning more that $250 million. It does not take a rocket scientist to calculate how much better it could be if Bollywood could get easier access to the more than 25,000 screens (3x India) at (10x) average ticket price.
To see the potential of media industry, let us take the example of America. America understood the power of the entertainment industry early. ‘The American Dream’ was sold to the world through Hollywood films. The result has been global demand for everything American, from food to fashion. Media contributes about 4 to 5 per cent of the US GDP, compared to a modest 0.5% for India.
Some might argue that since Hollywood is the largest film industry of the world, it enjoys the economies of scale. Well, then let us look at the smaller film industries like KPOP, or the Korean Film Industry, which has greatly contributed to the Korean economy. Because of KPOP, today, the export value of Korean TV programs have gone up by 3,500%, tourism by 600% and Korea has become the third largest exporter of cosmetics and skincare products, just after France and the US.
Even though it has suffered from step-motherly treatment for years, film industry remains an important contributor. In 2015, while the rest of the industries in India were struggling with recession, the Indian film industry raked in $1.6 billion and this is expected to double up by 2020 while adding 2.5 million jobs at the same time. Interestingly, it is the underdog that can outperform most of the other industries by a massive margin and become the next IT boom that the country desperately needs.
Not only this, the Indian film industry has some of the highest tax payers, the biggest political campaigners and social influencers. It has the potential of creating jobs in different sectors like tourism, hospitality, manufacturing apart from the obvious creative ones like directing and writing. In fact, beyond the national boundaries, the Indian film industry is grabbing eyeballs in several new markets like the South East Asian countries.
It is ironic that everyone except the Indian policy makers are aware of the potential that Bollywood has.
So what can be done? Well, the first and obvious would be to begin by giving the Indian entertainment industry an industry status and consider it while making and amending industrial policies. Regulating the industry and providing monetary and non-monetary incentives will result in several other industries enjoying the spillover. Another idea could be creating a desi version of the Universal Studios Theme Park which will result in more people being employed. There will be more demand for cast members to managers. Not only this, the themes and rides will keep the visitors flowing in while increasing the tourist spending. Simultaneously, the investors are likely to enjoy a higher ROI given the fact that recession does not really have an impact on the entertainment industry.
The government needs to get Bollywood easier access to new markets as this means more revenues and a spike in the global demand for everything Indian — cosmetics, cuisines, vehicles, mobile phones. Indian companies selling products in foreign countries can take advantage of this situation and increase their revenues while also creating more employment opportunities out here. In fact, a wider reach can help Bollywood account for approximately (two to three per cent) of the gross national income.
A slight focus on the entertainment industry can make the world believe in and sell ‘The Indian Dream”, and alongside help diffuse job crises.
The authors are finance professionals. Amit Bhartia is portfolio manager, GMO's Emerging Domestic Opportunities Fund. Saurabh Devendra Singh currently runs a media tech startup 1018mb & is an advisor (Gentleman Traveller) to Vinod Chopra Films . He has a 15+ year experience in finance. The views are personal.
* data from US Bureau of Economic Analysis & ‘Economic Contribution of the Indian Motion Picture and Television Industry’, by financial services firm Deloitte.
Updated Date: Jan 02, 2018 10:25 AM