Indian Government Offers Generous Incentives for Animation and VFX Services

Indian Government Offers Generous Incentives for Animation and VFX Services

The 2024 Ficci EY report has noted that global cost rationalisation will provide an opportunity for the Indian animation, VFX segment.

  • As the risk-taking appetite of global studios decreased in 2023, and they focused on creating top-end product at lower costs, the opportunity for India to increase its importance in the supply chain improved
  • The report expects the use of government incentives, co-production treaties and the set-up of many international VFX studios to provide a significant opportunity for India to take advantage of the global environment
  • IT will also provide India a chance to build its on technological IP and differentiate our service offerings from other countries

Build global IPs

  • India has already proven itself capable of creating YouTube friendly content for global kids audiences
  • It is time for India to create film and OTT IP that resonate globally, such as Mighty Little Bheem stated the report
  • The opportunities abound both from a mythology perspective as well as around various movie characters

Emerging opportunities in adult animation provide an opportunity for Indian studios

  • Between January 2020 and October 2023, the demand for adult animation in the US (excluding anime) surged by 152%
  • The growth was approximately three times higher than the supply growth, indicating a strong market opportunity, particularly during a time of heightened production budget scrutiny

Government incentives for exports will provide an impetus to the Indian animation, VFX segment.

  • The Indian government announced an incentive scheme for international animation, visual effects, and post-production projects using Indian services, with up to 30% reimbursement on a minimum expenditure of Rs. 10 million and an additional 5% for significant Indian content. The incentive, capped at Rs. 300 million per project, is to be applied for by the Indian service company involved in the project
  • The government also offers a 30% reimbursement on qualifying production expenditures in India for foreign feature films, web shows, documentaries, and animation projects with Indian co-producers, capped at Rs. 300 million per project. This incentive is disbursed on a first-come, first-served basis with a yearly limit of Rs. 1.5 billion, and applications must be made by the Indian co-producer.
  • These incentives are poised to boost the Indian animation and VFX segment’s global competitiveness and attract foreign collaborations

Industry alliances will enhance global coproduction and financing opportunities

  • NFDC Film Bazaar partnered with Southeast Asian AudioVisual Association (SAAVA) and the ATF IP Accelerator Project Market (AIPA) for a multi-year collaboration, enhancing film and TV co-productions across Asia
  • The partnership encourages diverse international projects that could further increase demand for VFX services in the Asian market
  • This initiative, coupled with India’s film incentives, is poised to boost the animation and VFX segments.
  • The Asia TV Forum (ATF) and Ties That Bind (TTB) have formed a partnership to introduce the ATF x TTB Animation Lab And Pitch which aims to unite Asian and European producers, fostering exploration of new financing and co-production opportunities

Studios will increasingly partner with universities and institutions to bridge the talent gap

  • To address the problem of finding and training the right talent, studios are forming partnerships with educational institutions
  • This proactive approach aims to cultivate skills from an early age, preparing for the increasing complexity of work outsourced to India
  • FTII and Toonz Animation collaborated in offering animation and VFX courses at Pune, with plans for an incubation center to encourage student-driven IP development
  • Reliance Animation Academy partnered with Sandip University, Allen House, and Pimpri Chinchwad University for early-grade animation and VFX training
  • Technicolor enhanced its training programs, both internally and at the Technicolor Creative Studios Academy, to support careers in audiovisual, gaming and computer graphics, collaborating with government ministries to promote creative arts careers
  • A key gap that needs to be addressed is the ability of animators to understand the ‘acting’ component, not just the art.
  • The approval of the National Centre of Excellence will also assist in this endeavour of developing talent.

Cloud and physical infrastructure build-out will assist global collaborations

  • Cloud-based infrastructure enables animation and VFX studios to support remote working, allowing artists to access content and collaborate from different locations globally
  • The shift to cloud computing reduces the need for heavy upfront investment in physical hardware and software, offering a more flexible, usage-based pricing model
  • With cloud service providers managing technical aspects like performance and security, studios can concentrate more on the creative side of content production.
  • In addition, proposed film cities being developed across UP, Maharashtra, Tamil Nadu, and others, will provide opportunities for large international studios to set up operations in fit-for-purpose locations

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