A Guide To Incentivizing Foreign Film Production In India- Part 2

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In Part 1 of this article, we laid down and elaborated on incentives available to a foreign producer if a foreign film is produced in India whether the same was a project shot in India...
India Media, Telecoms, IT, Entertainment
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In Part 1 of this article, we laid down and elaborated on incentives available to a foreign producer if a foreign film is produced in India whether the same was a project shot in India or if it was a project which involve animation, VFX and post-production activities in India.

In this article, we deal with the second half of the scheme, applicable to co-productions between the foreign producers and Indian producers.

I. The Scheme (Part II – Co-Production With Foreign Producers)

The idea and intent behind this part (i.e. Part II of the Scheme) is essentially to encourage co-production between Indian producers and producers from one or more countries under the treaty. This kind of arrangement as an Official Indian Co-Production ("Project"). A Project which has been recognized as an official co-production by the Government of India under an Audio-Visual Co-Production Agreement Treaty is eligible for incentives under this part of the Scheme.

Effective from April 1, 2022, an Audio-Visual Co-Production Agreements has been signed by India with a total of sixteen nations with a view to enable co-creation of content and collaboration. This treaty allows bi-lateral and multi-lateral co-productions. A bi-lateral co-production is where all the co-producers are from nations being a part of the treaty; whereas a multi-lateral co-production involves bi-lateral co-producers plus non-party co-producers.

To claim the incentive, the Project should have been granted 'Official Co-Production Status' by both- the MoI&B and the participating countries, under one of the India's official bi-lateral co-production treaties on Audio-Visual Co-production. If a Project qualifies and is granted the status of 'Official Indian Co-Production', it becomes eligible to apply for either of the following schemes (in addition to other benefits outlined in the treaty):

a. Incentive for AV Co-production with foreign countries;

b. Incentive for production of foreign films in India covered under the incentives for production of foreign films in India (as dealt with in Part 1 of this article)

For documentaries, prior permission to film in India is required to be sought from the Ministry of External Affairs ("MEA") before a Co-Production Status application is made to the Ministry of Information & Broadcast ("MoI&B") through the Film Facilitation Office ("FFO").

There are certain aspects about the applicant's profile provided for in the Scheme. The same are as follows:

i. The Applicant has to be an Indian Co-Producer (whether an individual, partnership, body corporate) established/incorporated in India;

ii. A Co-Producer should not be linked with another co-producer by common ownership of management or control (except to the extent that such link is inherent in making of the co-production project)

iii. Each Co-Producer is required to play an active role in the co-production. A producer who exists as a little more than in name only (i.e. letterbox company) shall not qualify as a co-producer.

iv. A binding agreement must be entered into between the co-producers in relation to their roles, responsibilities, liabilities, extent of their financial commitments, etc.

v. If there is more than one Indian Co-Producer, the Project should identify an "Indian Delegate Co-Producer". This Indian Delegate Co-Producer shall handle two things- the operations, financing amongst other activities and will be eligible to claim reimbursement.

The application procedure for incentives under this part is a three-step process: (a) Interim approval, (b) First disbursal, (c) Final disbursal. Under the first stage, an application for interim approval has to be made by the Indian Co-producer (the applicant) within 4 weeks of grant of Official Co-Production Status status; and an application status will be assigned to track the updates and process. The FFO shall, within 20 working days of receiving the application, intimate if any document/information is pending and is thus required to be furnished. The same has to be furnished within 15 working days of receiving such intimation. The application shall be then processed by the FFO within 20 days of receipt of complete documents. On successful evaluation of the application, an Interim Approval Certificate will be issued by the FFO. This certificate remains valid for a period of 12 months.

As a part of the second stage (i.e., the First Disbursal), the applicant has the option to submit claim application for disbursal of upto 50% of eligible reimbursement. However, the application for the same can be applied only after the Project commences. The FFO shall inform the applicant about pending document/information (if any) within 20 days of receipt of the application. The pending document/information required has to be furnished within 15 working days of the intimation. The application shall be accordingly processed by the FFO for approval of Special Incentive Evaluation Committee ("SIEC") within 20 working days from the date on which complete documents are furnished. The SIEC shall accordingly evaluate the application. In relation to the disbursal, 50% eligible reimbursement can be claimed once the principal photography/production in India begins coupled with expenditure having been done for the same.

The third stage relates to the final disbursement. The same provides that the final disbursement can be claimed once the Project is complete. This claim has to be submitted by the Indian Co-Producer within 90 days of completion of the Project along with the required documents. It is noteworthy that an NOC is mandatory for all the projects flagged for screening by the Script Evaluation Officer ("SEO") and for documentaries.

The Scheme in this part also specifies that the Project must include end credits given to the MoI&B and NFDC/FFO on all prints of the film (or other content as applicable) in the form "Filmed in India" or "Created in India". Additionally, the FFO logo has to be necessarily included at a prominent place. For documentaries, similar credit has to be given to the MEA as well.

II. Conclusion

It is estimated that by 2026, the media and entertainment industry in India shall become an INR 4,30,01 crore industry. A total of 35 foreign films were granted permission to film in the nation until November 2023. This is a significant increase from 2020 where the number of projects grant incentives were at a mere 4 foreign film projects. While in the following years of 2021 and 2022 the numbers rose to 11 and 22 respectively, the revisions in the quantum and added benefits seem promising in twofold – towards further and grander cross-border film productions and the potential employment it forecasts to the filming industry in India.

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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