Bollywood cashes in on foreign subsidies, cut production cost

Countries offer discounts on filming in their land to promote tourism, attract more foreign tourist

You might have been mesmerised by Prague after watching it in Bollywood flick Rockstar or by the bylanes of Berlin in Don 2. Most tourism boards are increasingly pitching for locations to producers and directors in India by offering subsidies, which can bear almost 40 per cent cost of a film.

“These incentives range from tax rebate, free stays, visa facilitation, and in certain cases, they even bear the cost of production. Cashing on the foreign government subsidies, production houses are now trying to film in exotic locales and in some cases, even alter the script to avail of this,” says Karan Arora, co-founder and chief executive, High Ground Enterprise, which deals in film production and does consultancy work with foreign governments on these issues.

Eros International has already scheduled the shooting of its two films in Fiji. The Fiji government recently announced it would offer 47 per cent of the production cost for films being shot there. “3G, staring Neil Nitin Mukesh and Sonal Chauhan, has already gone on floor. It’s a psychological thriller that revolves around the 3G spectrum scandal,” said an official from Eros.

Tourism boards of many countries, such as Switzerland and UK, have offered benefits but the trend has taken off in a big way now. Aditya Chopra’s Ek Tha Tiger, starring Salman Khan, will be shot in five different countries, including Ireland and South Africa, while Housefull 2 was shot in Thailand and Imran Khan starrer Ek Main Aur Ek Tu was shot in the USA.

According to industry officials, Don 2, which was filmed in Germany, got subsidy between Rs 20-25 crore from the German government, Ra.One got a subsidy of Rs 30 crore and Desi Boyz got about Rs 5 crore as subsidy from the UK government.

Trade analysts agree it works out cheaper to take the cast and crew to foreign locations. The entire film is completed in a single schedule.

Most countries offer tax sops in the form of VAT refund, 10-20 per cent, depending on the location and the amount of budget spent on the location. South Africa gives 30 per cent and Australia offers about 40 per cent, with additional incentives from individual states like Queensland. The French government has set up Film France to attract international film shoots and it offers incentives such as refund of VAT on shoots by foreign film crews. New Zealand inked a co-production treaty with India in June 2011 in an attempt to gain from the Bollywood market, after realising the benefits derived from various Bollywood films shot there.

Further, Spain and India are close to signing an agreement that would facilitate and promote co-productions. “We offer up to 20 per cent rebate to filmmakers on their payments, to both individuals and companies,” said Radka Neumannova, India director of Czech Tourism, as she stresses on the need to make the Czech Republic visible through Bollywood films.

All this is a small price to pay for the huge benefits that accrue from it. Countries are realising what films can do as they showcase their locations as per the script, which in turn lead to tourist inflow in those countries.

After Zindagi Na Milegi Dobara, the influx of Indian tourists to Spain increased to 32 per cent. “To turn this into an advantage, to increase the number of tourists and to keep the destinations’ name alive through continuous promotion, depends on many other factors. It is a great way to promote the country as movies are the most important form of entertainment in India. It strikes a chord with the movie buffs depending on how the location is featured in the movie,” Rakesh Jariwala, partner and segment champion (film entertainment), Ernst & Young.