Like any art form, films can elicit deep passion. Film industries, be it Bollywood or Hollywood, are huge dream-spinning enterprises which are in the continuous process of churning out entertainment, glitz and glamour. However, apart from the glitz and glamour, filmmaking requires a great deal of creativity, dedication and diligence.

In recent years, with the growing globalization of its operations, Bollywood has attracted a great deal of international interest. However, in comparison to Hollywood, Bollywood is still a small but gradually expanding part of the international market in terms of revenues. Furthermore, Hollywood is a more mature and successful film industry, with great international appeal and demand world over. Unlike Hollywood, discipline and professionalism is lacking in Bollywood and it is relatively devoid of corporate and legal practices. However, of late, great stress has been laid on a speedier corporatization of the production houses and professionalisation of players in Bollywood. Similarly, attempts are being made to develop the much needed entertainment infrastructure. The results of this research illuminate a number of issues relating to both industries, which, while confirming certain impressionistic beliefs, contradict the others.

Bollywood, until recently, represented a case of an industry with a large domestic market but without a great export tradition. However, the last few years have witnessed a considerable change and Bollywood has accomplished tremendous growth by becoming an important part of the international scene. In fact, the export revenues have caught up considerably with domestic revenues and are virtually at equal proportion.

Even the Indian government realized the true potential of Bollywood and has formally granted it "Industry" status. As a result, the Indian film industry is now entitled to bank financing, which was not available to it until 2001. Pursuant to this, the Industrial Development Bank of India ("IDBI") was the first bank to start financing film projects. With this, it appears that Bollywood has begun making an effort to go the corporate way, resulting in a change in the rules of the game with bottom lines, deadlines and delivery schedules suddenly assuming importance for the production team right from the stars to the spot boys.

In India, the myth prevails that Hollywood films are substantially funded by venture capitalists. However, our study revealed that venture capitalists barely play any role in financing a film. In Hollywood, films are mostly funded by way of bank financing, (normally assisted with the presence of completion guarantors), pre- sales and/or studios. Also, as it stands today, a substantially large chunk of funds for Hollywood films come from foreign jurisdictions, especially Germany. Outsourcing (of films or film related activities i.e. pre production, shooting, post production etc.) to relieve the cost is also gaining ground in Hollywood. For example, the number of Hollywood films being made in Canada (which proves to be very cost effective) is increasing every year.

While the process of filmmaking is a relatively set and standard process, starting with the acquisition of the script, pre-production, obtaining finances and then production, post-production, distribution and finally exhibition, there is a vast difference in the conduct and method of production, distribution and promotion of films in the two film industries. Hollywood is a much more professional and structured industry in its dealings and filmmaking processes as compared to Bollywood, which comes across as relatively disorganized, unprofessional and lacking in the required financial and corporate structures. There is a huge difference in both the industries' cost and revenue structures, methods and sources of finance and distribution. Similarly, power and participation of guilds, agents and business managers in Hollywood is far greater than that in Bollywood. Additionally, there is a glaring difference in the content and genres of films made in both these industries. There is an extremely strong presence of music, song and dance sequences in the Indian film industry coupled with a comparatively higher high degree of fantasy. These processes and differences are brought out in detail in Chapter II and III of this Report.

Though currently there are vast differences in the business and legal practices of the two industries, an effort is being made to eliminate or minimize their differences in order to evolve a common platform for them to function together. Along with the cross-fertilization of ideas, talent, culture and the creation of areas of synergy, there would be a steady adaptation by Bollywood of the business and legal practices followed by Hollywood, albeit not in the immediate future, but perhaps within the next few years.

The latest gizmos, professional management and slick advertising are the trends in Bollywood today. The new mantra for filmmaking is to be contemporary, use good technology and save time. The idea is to create polished and technically superior content, which will appeal to the global market without neglecting the home market.

There are also several legal and tax-related issues that the Indian film industry faces today. Chapter V and VI of this Report deal with the legal and tax regime of the film industry and outline some of the issues and incentives that the government should consider for the advancement of the film sector in India.

In spite of the vast differences prevailing between the two film industries, some existing areas of synergy, which have the potential to become driving factors in the future of Bollywood, thereby reducing the chasm with Hollywood, include:

• Digital content creation and computer-based animation for the overseas markets by combining the talent of Indian computer software engineers with Bollywood filmmakers, thereby making India an outsourcing center for high-quality, low-cost animation and special effects;

• Outsourcing of pre-production activities such as costume designing, creation of visual sets and computer simulation;

• Production of high-quality films by using premium talent and production facilities at relatively lower costs; and

• Co-production of films with Hollywood.

Industry Level Recommendations:

In order to become a more professional and disciplined industry, Bollywood needs to successfully improve its business and legal practices. Some of the changes that we believe could improve Bollywood are outlined herein below:

a. Corporatization, which in turn will enable film companies to become more structured and will aid in procuring film finance;

b. Formation of appropriate and specific contractual arrangements with all parties, including actors, directors, producers, financiers, crew, distributors, exhibitors, music companies and satellite channels. This will help in adequately protecting intellectual property rights in the films;

c. Improvement of infrastructure for the production and exhibition of films in India;

d. Development of educational and training institutes on filmmaking including animation and on the protection (in India and abroad) of intellectual property developed in India. These institutes could be models of private-public participation with involvement of reputed foreign film institutes;

e. Creation of a library system to protect intellectual property rights and to generate revenue, to facilitating further film production; and

f. Production of film content for a global market.

Policy Level Recommendations:

Based on the facts understood and the observations made during our research and in this Report, we have highlighted hereunder some of the policy-level changes that we believe would help in the growth of Bollywood:

a. Relaxation of foreign exchange laws to permit foreign investment in individual film projects, as opposed to investment in film companies. This would go a long way in showcasing India to the world and would also allow for the Indian film industry to generate significant revenue for themselves and foreign exchange for the country;

b. Facilitation of venture capital funding in the film industry as is discussed in chapter IX

c. Adoption of stringent measures to curb piracy at the state and national levels. This can be done by creating special courts under the provisions of the Constitution of India and also under the Criminal Procedure Code. The Government should organize workshops that spread awareness in the public at large;

d. Provisions for greater incentives to make films and the removal of procedural hurdles faced by foreign filmmakers to produce and shoot films in India;

e. Relaxation of censorship guidelines and avoidance of unnecessary delay in film certification;

f. Provision of tax incentives for the Indian film industry.

Having identified the potentials of Bollywood and Hollywood, it is important for these two industries to understand each other better. This Report makes an effort towards helping these industries interact with each other and to further assist Bollywood in growing out of its parochial mould so it may reach a more global audience.