The upcoming union budget should prioritise measures to boost consumer spending, support advertising sectors, foster start-ups, enhance skill development, improve infrastructure and promote technological innovation
The Indian Media and Entertainment (M&E) industry is experiencing a remarkable surge, fuelled by the digital revolution and the widespread adoption of smartphones. Despite being a global powerhouse in creative talent, the industry's contribution to India's GDP remains below 1 per cent, indicating significant growth potential compared to developed markets. As we chart a course for the future, contextualising the challenges and opportunities becomes crucial.
Current landscape and growth prospects
In 2022, the Indian M&E sector exhibited a robust growth of 19.9 per cent, surpassing INR 2.1 trillion ($26.2 bn). Projections indicate a continued upward trajectory, with an expected 10.5 per cent Compound Annual Growth Rate (CAGR), aiming to reach INR 2.8 trillion by 2025 (Source: FICCI-EY). However, there is untapped potential for the M&E industry to significantly contribute to India's GDP, akin to the 3-4 per cent seen in developed nations like the US, UK and Japan.
Union budget 2024-2025: key expectations
Boosting consumer spending
Consumer spending plays a pivotal role in M&E industry growth. To stimulate this, the government must focus on boosting employment and employability, thereby increasing disposable income. Reducing both direct and indirect tax burdens can further encourage discretionary spending, fostering a conducive environment for the sector's expansion.
Supporting advertising sectors
While Indian advertising grew by 19 per cent and achieved a milestone by crossing the INR 1 trillion mark in 2022, its percentage of GDP remains at 0.4 per cent, significantly lower than global counterparts such as the UK which is at 1.5 per cent and the US at 1.3 per cent. Government support for rural development, infrastructure growth, and welfare schemes can revitalise the rural economy, encouraging increased consumer spending and subsequently higher ad spends. To support this expansion, the government must ensure the continued viability of direct-to-consumer sectors that account for a sizeable portion of advertising expenditures.
India’s SMEs contribute to 30 per cent of India’s GDP today, however, their contribution to the ad spend remains limited. There is a need to get more SMEs to jump on the advertising bandwagon by incentivising SMEs to spend more on advertising.
Fostering start-ups and SMEs
Continued support for start-ups is crucial for sustaining momentum and overcoming funding challenges. Incentives, favourable tax policies, and support for emerging industries can contribute to a thriving start-up ecosystem. Additionally, incentivising SMEs to participate in advertising can diversify ad spends, benefiting both the industry and the economy.
Over 4 million people are employed directly and indirectly in the INR 2.1 trillion Indian M&E business. Given the dynamic nature of the M&E industry, continuous skill development is imperative. Establishing specialised skill hubs and formal education institutes for media and entertainment can ensure a well-equipped workforce. A task force, similar to the AVGC (Animation, VFX, Gaming and Comic Policy) council, should address technical skill requirements to align with international standards.
Despite significant growth, challenges such as TV dark homes and limited smartphone penetration persist. When we consider one of the largest M&E sub-segments i.e., Broadcasting – in a country with 300 million households, 100 million households are still without a television set and/or any access to entertainment content. The recent introduction of the 'direct-to-mobile' initiative may help to reach these households by offering content access without the need for the internet. With smartphone penetration estimated at 50-55 per cent in India, there remains significant room for expansion. Collaboration between the government and the industry can ensure television access to every household and foster digital inclusion through subsidised data infrastructure and devices. Production incentives, coupled with streamlined processes, can attract filmmakers, generate employment, and boost tourism potential.
Technology and innovation
Embracing technological advancements is crucial for the M&E industry's evolution. Allocating funds for research and development, particularly in artificial intelligence, can spur innovation. Financial incentives such as grants and tax credits can motivate businesses engaged in cutting-edge tech solutions, positioning India as a global leader in media and entertainment technology. The media and entertainment sector is at the vanguard of innovation in an era marked by rapid technological breakthroughs, with technology having a significant impact on both its present and future. The integration of state-of-the-art instruments and digital remedies tackles critical requirements and obstacles, augmenting all facets of content generation, dissemination and consumption.
As India aims to become a $10 trillion economy, the M&E industry has a pivotal role to play. We should target that the M&E sector should grow to more than $100 billion by 2035. The upcoming union budget should prioritise measures to boost consumer spending, support advertising sectors, foster start-ups, enhance skill development, improve infrastructure and promote technological innovation. With the right policies, the Indian M&E industry can not only contribute significantly to the nation's GDP but also emerge as a global entertainment hub.
(The author is Arghya Chakravarty, COO, Shemaroo Entertainment)
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.
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