Producing Bollywood: Inside the Contemporary Hindi Film Industry (12 page)

The common appeal across all of the presentations was that the Central government needed to grant industry status to filmmaking, make available institutional finance, and bring policies regarding filmmaking under the purview of the Central government, rather than the various state governments. Although all of the presentations were critical of government policy, the overall tone was polite, respectful, and patient— similar to Abbas’s letter to Gandhi discussed earlier—and many speakers took care to end their presentations with a declaration of how filmmakers were good citizens who always provided service to the nation. Producer/ director Yash Chopra ended his presentation, “It may be added with all humility that the Indian film industry has always been in the forefront— be it war or earthquake or any calamity—and in every aspect of life shall be able to contribute much more towards the national integration and towards the government exchequer, and will feel rightfully proud as a responsible community of this great country.
Jai Hind
[Long Live India]” (Chopra 1998: 28).

Given the history of state attitudes toward filmmaking and the unfulfilled promises regarding policies and regulations governing cinema, ap
parent from filmmakers’ statements presented earlier in this chapter, it came as quite a surprise when Sushma Swaraj, the union minister of information and broadcasting, announced industry status for filmmaking in her remarks at the end of the conference. Various news media reported on filmmakers’ reactions to the announcement. English-language newsmagazine
India Today
described the scene, “The Applause was thunderous. Bollywood bigwigs, including Yash Chopra and Subhash Ghai, were among those on their feet clapping jubilantly. Union Information and Broadcasting Minister Sushma Swaraj had just announced ‘industry status’ for the Indian film industry” (Aiyar and Chopra 1998). The national daily
Indian Express
, in an article titled “Bollywood celebrates ‘Independence Day,’ ” quoted producer J. Om Prakash stating, “Swaraj has exceeded 90 percent of our long overdue demands” and FFI president Sultan Ahmad saying that “it was more than what we’d asked for” (Desai 1998).

The state’s most immediate reason for granting industry status had to do with trying to “rescue” the Hindi film industry from the “clutches of the underworld,” or organized crime, and weaning it from its dependence on “black money” or unaccounted and untaxed cash income.
³⁶
The finance capital for filmmaking in India has been connected to the vast unofficial—or “black”—economy, which some scholars estimate is nearly half the size of the official economy (Kumar 2005). One of the results of the high rates of taxation in India has been the creation of a parallel economy with high amounts of unregulated economic activity—mainly cash transactions—and large sums of unreported (thus untaxed) income, commonly referred to as “black money.”
³⁷
The Hindi film industry has been one of the main places to invest unreported income in India. The nature of finance meant that the majority of financial transactions and business dealings in the film industry have been in cash, where the accounting is highly secretive and most contracts have been oral.

Both the
Indian Express
and
The Times of India
had lengthy editorials the next day, endorsing the move and arguing that it was long overdue. The Times stated,

Common to both editorials was the perception of the dominance of organized crime—“the underworld,” in Indian parlance—in filmmaking, and that industry status would “exorcise the spectre of the underworld, which reportedly finances one-third of all Bombay films” (“Boost for Bollywood” 1998). The
Express
asserted that although the film industry called itself an industry for decades: “Behind that dignifying epithet lurked a shadowy business that could be hardly termed respectable. . . With the recognition of the film industry, its dependence on dubious sources of funding will hopefully end” (“Finally an Industry” 1998). While criminal activity has always played some financial role in filmmaking—profits from the Second World War black-marketeering were invested in the Hindi film industry—in 1997, a few high-profile murders of filmmakers, attributed to gangsters, brought the connections between organized crime and the Bombay film industry into the national and international media spotlight.
³⁸

While the declaration of industry status took place on May 10, 1998, and Swaraj promised that the “modalities would be worked out soon” (“Boost for Bollywood” 1998), the more concrete assertion of industry status did not occur until October 19, 2000, when filmmaking or the “entertainment industry” was recognized as an “approved activity under ‘industrial concerns,’ ” according to the Industrial Development Bank of India Act of 1964. Being designated an industry communicates that filmmaking is part of the organized industrial sector. It was this recognition that paved the way for financing from banks and other financial institutions, since prior to this announcement, banks chose not to extend loans for filmmaking, due to its high-risk nature. Govind Nihalani, a longstanding and critically acclaimed director, explained the impact of industry status to me: “It created a confidence among the financing community, that after all, this is not such a speculative business, that it’s possible to treat this industry as a proper business and if controlled well, and here— it’s very simple—you control your budget, bring in the right inputs, and then it is a viable industry” (Nihalani, interview, May 2006). Since 2000, industry status has introduced a greater variety of financing for film
making. Both the banking and corporate sectors have begun to invest in filmmaking, either by providing loans or by creating production companies. Some of the largest Indian industrial houses and corporations have created media subsidiaries that have entered television and film production. Another source of finance is the stock market, and some film production companies and exhibition companies have become public limited companies, with their stock listed and traded on the Bombay Stock Exchange. Industry status by the Central government also set the tone for state governments to rethink their policies toward filmmaking; although entertainment tax is still a source of contention between filmmakers and the government, some states offer tax breaks for films shot in their territory, while others have enabled the current boom in multiplex construction all across India by offering tax holidays to exhibitors and real estate developers.

While the initial declaration of industry status was explained in the familiar mode of the state’s role in trying to improve cinema and filmmaking— that cinematic quality was related to sources of finance, and the state needed to play its part in cleaning up filmmaking by helping filmmakers escape from the clutches of dubious finance—subsequent discourse has focused on the economic potential of filmmaking. Rather than perceiving it as a vice or as a problem as it had in the past, since 2000 the Indian state has perceived commercial filmmaking as a viable, important, and legitimate economic activity that should be nurtured and supported. Government agencies, in partnership with film trade organizations, promote the export of Indian films at markets held during major film festivals such as Cannes. Regulations regarding foreign investment within the media sector have been relaxed, so that up to 100 percent foreign direct investment (FDI) is allowed in any aspect of filmmaking: financing, production, distribution, exhibition, or marketing. At various international fora, government officials court foreign investment by representing entertainment media as a high-growth industry in India. For example, at the World Economic Forum held in Davos, Switzerland, in 2006, the India Brand Equity Foundation—a public-private partnership between the Ministry of Commerce and Industry and the Confederation of Indian Industry (CII)—distributed a report, “Entertainment and Media,” which provided an overview of the various media forms and their economic potential in India. After stating that “India today is a major emerging global market,” the report asserts, “The Indian Entertainment and Media Industry has out-performed the Indian economy and is one of
the fastest growing sectors in India” (Pricewaterhouse Coopers 2006b: 1). The report concludes, “With a host of factors contributing to the doubledigit growth of the industry and an added easing of the foreign investment norms, the E&M Industry in India thus is a sunrise opportunity that presents significant avenues for investment” (Pricewaterhouse Coopers 2006b: 20).

To fully comprehend the dramatic shift in attitudes toward cinema— from a
tool
for
social change
to an engine
of
economic growth—it is illustrative to compare the following two statements made by state officials separated by a span of twenty years. The first statement was made by the Chief Minister of Maharashtra, A. M. Antulay, in 1981, on the occasion of the fiftieth anniversary celebrations of Indian sound films. He wrote, “The film being the most effective medium of communication, its potential, besides providing wholesome entertainment to the masses, lies in its tremendous capacity to create social consciousness among the people about all evils, and this must be harnessed to the maximum benefit of society at large. I am glad that the film industry as a whole is helping every national cause in its own way” (in Ramachandran 1981: 8). The second statement was made in 2000, by Arun Jaitley, minister of information and broadcasting, during a conference held by FICCI titled “The Indian Entertainment Industry: Strategy and Vision.” He stated, “The entertainment industry, along with the it industry, have become the buzz words globally. It is being widely recognized and accepted that together these two sectors will increasingly dominate the world economic landscape. Recognizing the importance of this industry, the budget for this year has given major concessions to this segment, which will pave the way for its rapid growth. It is expected that, taking advantage of these measures by the Government, the Indian entertainment industry would take the initiative in multiplying manifold its revenues, contribution to the exchequer, employment potential, and foreign exchange earnings” (Arthur Andersen 2000). Although both ministers expect filmmakers to serve the nation—either socially or economically—film for the former is a medium of communication and means for social transformation, while for the latter it is a vehicle for economic ascendancy. Jaitley’s remarks also acknowledge that state economic policies are key for the success and growth of filmmaking—a point that filmmakers had been arguing since the 1950s, but went unheeded for decades.

Along with a change in the language used to discuss cinema—from “film” to “entertainment industry,” from “social consciousness” to “contribution to the exchequer,” there has also been a significant change in
the nature of reports and publications generated about filmmaking. For more than four decades, the various inquiry committees, symposia, and conferences were initiated by the state, mainly via the Ministry of Information and Broadcasting, to study the problem of cinema primarily both as an art form and as a tool for development in India. Since 1998, FICCI, rather than the MIB, has been the main organization sponsoring conferences and discussions about filmmaking in India—as part of the larger category of the entertainment industry—primarily through its annual convention, “FRAMES: Global Convention on the Business of Entertainment.” As apparent from the title, the focus is on the commercial aspect of cinema—the film industry is analyzed with respect to its projected turnover, export earnings, and tax revenues; rather than via the state bureaucracy, these reports and financial analyses of filmmaking are produced by multinational accounting and consulting firms such as Arthur Andersen, Pricewaterhouse Coopers, KPMG, and A. T. Kearney, along with Indian firms such as Yes Bank.

Although filmmakers who spoke at the 1998 conference presented industry status as crucial to the health and success of filmmaking, in my later visits to Bombay, members of the industry I spoke to were less sanguine about the impact of industry status. Many felt that other than granting industry status, the state had not done much to address the issues facing filmmaking, specifically the problems of piracy, high taxation, and unreasonable export and import regulations. Shravan Shroff, a member of the board of directors of the Shringar Group—an integrated distribution and exhibition company—and the director of their exhibition division, Fame Cinemas, shared his views about the role of the government in filmmaking: “I think the role of the government is pretty non-existent. They don’t do anything. They granted the industry status so there is funding from IDBI [Industrial Development Bank of India] but proactively, are they working with industry bodies, like how the U.S. government works with the MPAA to look at piracy issues? Not really” (Shravan Shroff, interview, May 2006).

While many filmmakers were subsequently dismissive about the impact of industry status, I contend that the symbolic significance of the declaration was tremendous. It was only after gaining industry status that top industrial houses and corporations, such as the Birla Group, Tata Group, Sahara, Reliance, and others began their forays into film production. FICCI created its Entertainment Committee in 1998; prior to this, there were no formal or institutional partnerships between the world of Indian business and the world of filmmaking. There were no laws or regu
lations preventing Indian corporations from entering film production, distribution, or exhibition.
³⁹
The dominant image of the film business, as a disorganized money-laundering operation, populated with unseemly characters, made it difficult for publicly traded companies to venture into this domain. Industry status granted legitimacy to filmmaking, within the larger financial and corporate community, that had not existed previously.