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Avatar, Avengers, X-Men, Interstellar, Spiderman, Thor, Games of Thrones, Godzilla, Gravity, Transformers – The common “sutra” in all these big billion-dollar Hollywood blockbusters is India. Many of us, if not all, have seen these movies and admired the realistic VFX effects. These VFX effects, just like the movies themselves evoke mixed emotions – emotions of pride as well as concern. Pride because there are Indian VFX studios behind these movies. Concern because the realization dawns now about how little we know of the depth in skills and capabilities that the Indian VFX industry possesses.
What is equally surprising is the small revenue take-home for Indian VFX studios from such global blockbusters. A case in point is “Avatar”, the top-grossing movie of all time, which collected billions worldwide, spent USD 180 million in special effects. Prime Focus, an Indian VFX firm, reportedly created two hundred of the over one thousand six hundred VFX shots in the movie and collected a mere USD 4 million.
This and many other similar examples reflect fewer returns to the immense capabilities and potential of the Indian VFX industry. The same argument can be extended to the Animation, Gaming, Comics as well as Extended Reality domains, wherein Indian companies’ creds include Tree of Life, Shrek, Stuart Little, The Little Mermaid, Aladdin, FIFA and Grand Theft Auto. From India again, companies like Graphiti, Toonz Animation, Hungama, Crest Animation, Nazara, Dhruva Interactive and Amar Chitra Katha are global benchmarks in their respective domains. India’s AVGC industry is no longer in its infancy and has the latent potential to capture a large share of the global market. However, despite being 18 per cent of the global population and 3.3 per cent of the global GDP, India still holds only less than 1 per cent of the global AVGC market share, currently estimated at USD 400 billion.
A close look at the current scenario suggests that India is a net importer of global content with limited impetus & support for companies to create local content of global standards. India is potentially seen as a back-office of the global AVGC market with the total ecosystem lacking a cohesive effort and an integrated regulatory framework at the centre/state level. The high costs of AVGC technologies (including imports) further limit R&D and IP creation in India preventing large-scale adoption at grass root levels. Estimates suggest India needs over 2 lakh skilled professionals annually in the AVGC domain which is again a challenge due to the skill gaps in the existing education and skilling ecosystem in the country.
No wonder, there is a need felt in the highest offices to strengthen the AVGC sector enabling India to realize its demographic dividend. To this effect, an AVGC Task Force to identify interventions required to realize the full potential of AVGC sector in India, was announced in Budget 2022. The best part herein is the multilateral representation – from industry to academia to Government with multiple ministries from skill development to education to electronics and IT to the promotion of industry and internal trade.
With a focus on unleashing India’s demographic dividend, making India a global brand and promoting Indian culture across the world, multi-stakeholder actions are imperative, especially in the areas of market access & development, education, skilling & mentorship, enhancing technology access and financial viability, and inclusive promotion of Indian culture and heritage.
Few multi-dimensional interventions that are parallelly being considered include:
- Launch of an international AVGC platform with focus on partnerships, FDI and co-production treaties
- Strengthening the AV sector under Champion Services Sector scheme for AVGC promotion globally
- Extending Make in India campaign to the AVGC sector
- AVGC focused UG and PG degree courses, standard skilling initiatives for AVGC and establishing AVGC accelerators and innovation hubs in academic institutions in tier 2 and 3 cities as well
- Democratize AVGC technologies for Indian start-ups, MSME and academia
- PLI scheme to incentivize AVGC hardware manufacturers
- Enhanced EoDB in AVGC sector through tax benefits and by curbing piracy
- A dedicated fund for content creation, and high-quality indigenous content
- More robust IPR laws for indigenous products and content
The global AVGC market is projected to grow to more than USD 600 Billion in the next 5 years. If India is to realize its USD 5 Trillion vision by 2028-2029, it will require boosting the services sector contribution to USD 3 Trillion. For that, sunrise sectors such as AVGC need to be promoted by way of centre-state, public-private and inter-ministerial partnerships. The Indian AVGC sector can, at the least, achieve a 5 per cent global market share and employ more than 20 lakh citizens in this decade.
The industry is saying “Content is king, and we are here to stay and make an impact!” A timely intervention by both the central and state governments will work wonders for this upcoming sector with the potential to be a “unicorn” among other sectors in India.
Written by Sameer Jain, Managing Director, Primus Partners
