The country has to be satisfied doing only lower-rung work of offering services, without creating original content, he said.
"We still don't know how to tell stories and that is the biggest problem being faced by the industry," he said, adding we need to come up with original scripts for animation films.
"India predominantly has been in hire mode or in services job when it comes to the AVGC sector. It's only in the last couple of years that India is trying to create intellectual properties on the space," Madhavan, who has launched his own animation and visual effects company Assemblage, told PTI on the sidelines of Ficci-Frames here.
He said one of the main reasons for this is that people associate animation with children and not the family.
Madhavan, who quit as Chief Executive of Crest Animation Studios to start up on his own, said there is a potential for growth for the sector. KPMG has projected that the CAGR of animation and VFX industries will grow by 16 per cent during next five years.
Given the potential the sector offers, both infrastructure and skill development works are taking place in a big way simultaneously and several players are involved in it. One such entity is Kerala Industrial Infrastructure Development Corp (KINFRA), which is into various activities, including film and video services.
KINFRA, which started with development of film processing laboratories in Thiruvananthapuram in 1995, has replaced its film processing labs with animation institutions.
Whistling Woods International Institute, a city-based film, communication and media arts institute, has added animation to its curriculum, said its President Meghna Ghai Puri said.
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