A Guide To Incentivizing Foreign Film Production In India: Part 1

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If you are a foreign film producer thinking about your next film or if you fancy collaborating with a foreign film producer, in 2022 the Ministry of Information and Broadcasting...
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If you are a foreign film producer thinking about your next film or if you fancy collaborating with a foreign film producer, in 2022 the Ministry of Information and Broadcasting (MoI&B) had launched a scheme, aiming to invite collaborations to promote India as a filming destination.

This Incentives Scheme for Production of Foreign Films was further catapulted and revised in 2023 and which caters to 2 kinds of projects; (a) production of foreign films in India by a foreign producer; and (b) co-production of films in India between an Indian and foreign producer(s).

Part 1 of the scheme deals with incentives if a foreign film is produced in India and covers (i) projects which are shot in India; and (ii) projects which involve post-production activities in India.

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A. Live Shoot Projects 

For foreign productions shot in India, the international producer is eligible to claim reimbursement via a single Indian applicant being a line producer/line production services company. This applicant is responsible for all production-related expenditures and arrangements on behalf of the international producer.

The scheme provides for a reimbursement of upto 30% QPE. In order to claim this incentive, prior permission from the Ministry of I&B is necessary and at least INR 3 Crores QPE is required to be invested in the project. If the project falls under the category of documentary, the rules differ. An additional incentive of 5% of QPE can be claimed as a bonus incentive if at least 15% project labour employed is Indian. Further, an additional 5% incentive can be claimed if the project is classified as Significant Indian Content (SIC), which qualifies as such if the content meets at least one of the following:

1. If minimum 25% of the total budget of the project is spent in India;

2. At least one of the three Lead Characters (ie the characters which have the longest role in terms of screen time or they have the strongest screen presence) should be Indian or should be played by an actor who is an Indian national (including voice talent);

3. At least one creative head of department (Director, DOP, Writer, Music Director, etc.) is an Indian National;

4. The project presents and/or promotes a positive image & perception of India, or it presents the beauty of India's tourist attractions.

The application process for claiming the incentive is a two stage process. In the first stage (the Interim Approval), an application has to be made to the Film Facilitation Office (FFO) by the applicant on behalf of the foreign producer prior to the start of the principal photography. The application shall be processed within a period of 20 days from the receipt of all documents/information by the applicant. Accordingly, an Interim Approval Certificate shall be issued having a validity of 12 months. If the project has a QPE of 20 crores, the certificate shall be for 24 months.

The final application for the reimbursement disbursal has to be made by the applicant within 90 days of completion of the project in India. This application has to be accompanied with certain documents (as specified in Part I of scheme), detailed expenditure statement certified by a chartered accountant along with copies of invoices and account statement. The same shall be followed by verification of audited statements by an auditor appointed by the FFO and MoI&B. Within 60 days of receipt of complete documents, the FFO shall process the application for the approval and evaluation of a Special Incentive Evaluation Committee (SIEC).

Upon the approval for disbursal by the SIEC, the following disbursal milestones shall be followed:

i. If the Script Evaluation Officer (SEO) does not recommend a requirement of NOC from the Government of India, 90% of the incentives will be disbursed to applicant's bank account. Remaining 10% will be disbursed on submission of a copy of final credits which has to be released with a mention of "Filmed in India" and upon receipt of an affidavit from the producers that the film has been released for public.

ii. In cases where the SEO recommends the film to be screened to a representative of Government of India, an NOC from such representative is required. In such cases, 20% of the incentive will be disbursed immediately, 70% will be disbursed on receipt of the NOC from the representative and the remaining 10% will be disbursed on submission of a copy of final credits which has to be released with a mention of "Filmed in India" and the logo of FFO along with the aforementioned affidavit.

Although the scheme may be significantly cost-effective, there are a few things which, if not ensured, might negatively affect it; thereby making the applicant ineligible to claim the incentive benefits so provided. The same include (a) the film if not filmed as per the permit by MoI&B or MEA (for documentaries), (b) if the production has had a negative impact on the natural resources/environment.

Additionally, the Ministry of I&B can withhold the approved incentives if there is a legal dispute or until the respective ministry considers it appropriate to release the incentive. It is in this relation essential to note that Interim Approval of the incentive has been made mandatory & vital under the scheme. An applicant who either fails to apply for and receive Interim Approval or is not produced as per interim approval certificate letter cannot claim the incentive under the scheme.

B. Animation, VFX & Post-Production Activities:

An international producer can claim reimbursement through an Indian applicant (a post-production/VFX/animation company, PPA) based in India. The PPA handles all production-related expenses for the producer and must attach an agreement detailing service delivery, reimbursement, and fund distribution with the application. Only one PPA can file the application if multiple PPAs are involved.

To claim incentives, the applicant must spend at least INR 1 Crore (Qualifying Production Expenditure, QPE) in India for the international producer's post-production, VFX, or animation services, allowing for reimbursement of up to 30% of QPE. An additional 5% bonus can be claimed if the project qualifies as Significant Indian Content (SIC), determined by a committee of three Script Evaluation Officers (SEOs) evaluating the script and budget. Unlike live shoot projects, no additional incentive is provided for employing Indian labor.

If the applicant has already applied for live shoot incentives, they are ineligible for incentives under this section, even if services are provided by a different production company. However, each season/series of the same project is treated as a separate project.

The application process has two stages. In the interim approval stage, an application must be submitted within 30 days of the agreement execution. The Film Facilitation Office (FFO) processes it within 45 days, issuing an Interim Approval Certificate valid for 12 months (24 months if QPE is INR 20 Crores or more).

For final approval, the application must be filed within 90 days of project completion, including an invoice in foreign currency and a Foreign Inward Remittance Certificate from an Indian bank. The Special Incentive Evaluation Committee (SIEC) evaluates the application, and the FFO processes it within 60 days.

Incentives are disbursed in two milestones: 90% upon approval, and the remaining 10% after the final credits submission and an affidavit confirming the film's public release. The final copy must prominently display "Created in India" and the FFO logo.

Applicants are ineligible for incentives if they fail to adhere to the interim approval certificate or meet disqualification criteria similar to those for live shoots

Stay tuned for Part 2 for details on the incentives for co-production projects between a foreign producer and an Indian production company.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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