Guest Interview: In conversation with Mr. Kulmeet Makkar, CEO- The Film and Television Producers Guild of India

I am pleased to bring to you our next guest interview with Mr. Kulmeet Makkar, Chief Executive Officer- The Film and Television Producers Guild of India.

Mr. Kulmeet Makkar has been part of the entertainment industry for around three decades and has handled senior management positions in Saregama & Reliance Big Entertainment before taking over the new venture Shreya Entertainment as President & CEO.

1. Kulmeetji, could you tell us a bit about yourself and your journey as a film producer and as a CEO of the Film and Television Producers Guild of India?

I have been an entertainment industry professional for close to 30 years now, having served senior roles in Saregama India Limited (More popularly known as HMV in India) including Overseas-based out of UK, Reliance Entertainment in India and Shreya Entertainment as its president & CEO, where I was involved in film and television production and digital entertainment. I was appointed as the CEO of the Film and Television Producers Guild of India in December 2010.

In my current role as the CEO of the Guild, I am responsible for a series of initiatives involving film, television and new media production sector in India on the industry development, policy matters, taxation, copyright, government related issues, locations and incentives, cinema tourism, foreign treaties, liaising with foreign delegations to provide international exposure for its members and arranging conclaves for the benefit of members of the industry.

2. OTT– The past few years have seen the emergence of OTT Platforms which has completely changed the landscape of the Indian film and television industry. What would you like to say about the OTT boom in India and this changing landscape?

OTT provides vast opportunities to all kinds of content creators including large production houses, independent professionals as well as upcoming content creators. In India, with the huge talent pool and having a limited access to traditional platforms, one hopes to see many more talented writers, technicians and actors making a huge impact. At the same time, the audience can expect exciting content across genres which often get restricted on traditional platforms.

There is no doubt that OTT services would continue to grow, the challenge however could be the cost vs revenue at the initial stage. Currently, the OTT platforms in India are focusing more on distributing existing content by making it easier for audiences to access across the globe and at the same time, the original content in the niche segment is made available.

In order to meet audience expectations, there is likely to be more pressure on the traditional platforms to provide content that appeals to audience and at the same time made available across platforms.

3. Censorship– The censorship issues have been daunting the film industry since times immemorial. No steps have been taken post Shyam Benegal Committee Report. With Mr. Prasoon Joshi becoming the CBFC chief, a lot was hoped to be achieved but the whole Padmaavat controversy was a setback for the entire industry. Could you talk to us about the challenges being faced by the producers and if the Government is taking any steps to address the same?

The fundamental issue has been the pending amendments in the Cinematograph Act of 1952 which have been long overdue. Though the Censor board was renamed as the Central Board of Film Certification years back however unless and until the Act, Rules or the Guidelines are not amended, the very purpose of certification gets defeated. There was a Justice Mudgal Committee formed by the previous Government which made its recommendations and subsequently the Shyam Benegal Committee formed by the NDA Government which effectively looked into the basic functioning and procedures to certify films. Padmaavat controversy has not been the only exception. There have been many such issues of the similar nature in the past and I suspect, these issues would continue to impact the industry. This is mainly due to the subjective approach of the CBFC in the absence of modified certification rules and guidelines. We do hope that the recommendations made by both the committees are considered to amend the Act and Rules to make the certification process more transparent and contemporary. We as an industry body shall continue to have a dialogue with the ministry to come up with the amendments at the earliest possible.

4. GST– The M&E industry seems to be the neglected sector in every Finance Budget. How is the film industry coping with GST? Are there any issues on the taxation front which the industry is demanding from the Government?

The basic principle of GST in the country was to abolish multiple taxes at different levels having cascading effect and have a uniform tax structure. For years, the film industry was assured that with the introduction of GST, the archaic state entertainment tax laws will be done away with and taxes shall be rationalised. It is unfortunate that the film industry has been treated differently in the GST regime as well. Post the introduction of GST, multiple taxes as well different rates in the value chain continue to impact the film industry. Though in the GST regime, the state entertainment tax has been subsumed however the entertainment tax imposed by the local bodies has been kept out of GST. It is disheartening to see that many states passed a bill whereby the power to impose entertainment tax has been passed on to the local bodies. In addition, there are many other GST policy issues impacting the industry such as inverted duty structure which is caused due to different tax rates at different levels of input and output services. GST rate of 18% is applicable for the services rendered for film productions whereas rate of 12% is applicable while the copyrights are transferred and further a rate of 28% is applicable on cinema tickets above Rs.100/-. Ideally, there should be a single rate of tax at every level and the GST rate of 28% on cinema tickets above Rs.100/- should be brought down. It is unfortunate that the Film sector is not given the status of an industry where the indirect tax policies will be accorded in line with other service industries.

5. Title registration– Film and Television title registrations are still handled by the film trade associations, Guild being one of them. We are seeing a rising number of disputes on film title registrations in the recent past. What is the reason behind this and how can this be addressed?

Historically, the titles have been registered by the various film trade associations. This has been the prevailing practice for a very long time even though this may not be the ideal process in the absence of a common online portal and uniform bylaws.  It is often reported that the film trade associations tend to favour their members. As we believe that the title registration cannot be a commercial activity for any association, hence this service should be provided to the producers free of cost and also importantly through a single body responsible to manage this activity through online mechanism, with 100% transparency. Some of the concerns often noticed are that the producers as members are holding on to a title/titles indefinitely without any usage and at the same time there is no cap on number of titles each production house can register in line with their production slate. Legally speaking, most of the disputes related to titles have made judiciary to raise questions about the authority of trade associations in this matter.

6. Tourism-A lot was said at the FICCI Frames 2018 about the film industry boosting the tourism economy of the country. Have any steps being taken to ensure single window licensing or have one umbrella license? What are the challenges still being faced by the film-makers?

Cinema tourism is a growing phenomenon worldwide, motivated by both the growth of the film industry and the increase in international travel. Various studies and statistics have proved the positive effects cinema has on the travel decisions made by potential tourists for their holidays or visit to a destination. It is seen that audiences are motivated by the beauty of locations showcased in films.

It is a known fact that films reach wider audiences with a reasonable investment by any country as targeted tourism advertisements and promotion. Film and tourism industries do share a strong relationship with an objective to achieve major revenue growth for both the industries. Cinema tourism therefore could be a game changer in the dynamics of both film & tourism industries. it could also open avenues for hospitality, food and catering sectors besides generating employment opportunities for the underemployed and unemployed.

Most of the countries compete with each other to attract film productions by offering incentives, cost effective quality services and hassle-free processes. We as Producers Guild work very closely with many of the countries and Indian states. There are still large number of Indian states who have unfortunately not understood the potential of Cinema tourism. For the last many years, we are constantly working with Indian states and providing our inputs to create a film policy to ensure simplified processes through single window framework and necessary support to film and television productions.

7. Copyright- One of the most controversial topics for the entire industry is the royalty payments to the authors and performers. We are now close to 6 years being completed since the Copyright Amendment Act, 2012 came into effect. I would like to know your views from a producer’s perspective on this whole royalty conundrum.

The Copyright Amendment Act 2012 is a reality. I believe there are many concerns and objections raised at the various levels, some of which still awaits clarity. As far as royalties are concerned, we are of the opinion that the rightful royalties on the underlying works must be collected from the users and paid to all the stakeholders including authors, performers and publishers as governed by law and the Copyright Board without impacting issues of ownership.

8. IPR enforcement- Piracy still continues to haunt the film industry. What steps are being taken at the government level to curb piracy?

We are arguing for the National IPR policy to make provision for copyright sector in the “M&E” sector with equal significance in line with the IP assets created out of any other sector. The protection of the copyrights in the “M&E” sector is the key to this industry. It is therefore important that the Policy, in its implementation should have adequate systems with regard to the copyright administration and protection. Having said that, our priority therefore is to address the following 3 challenges: Firstly, there are amendments required in the IT Act, Cinematograph Act as well Copyright Act to make laws more stringent. Secondly, the enforcement at state levels by forming as well as strengthening Cyber cells is very critical. Telangana Government was extremely proactive to respond to the industry needs and formed Telangana Intellectual Property Crime Unit (TIPCU) on the lines of a successful enforcement mechanism in UK called PIPCU. Maharashtra Govt has also initiated a similar unit and we hope to see many other states to follow. The industry has been working closely with the Ministry of Industry and Commerce through DIPP as well as the Ministry of Information & Broadcasting to take this up with the states as we know, this is a state subject. Thirdly, we are working closely with DIPP on the IPR Awareness and education program. The Guild has partnered with DIPP to create Anti-Piracy campaign with the leading artistes and we are happy to share that the campaign was formally launched by the Hon’ble Minister of Industry and Commerce, Shri Suresh Prabhu on 11th March 2018 with acclaimed actress Vidya Balan appearing in the first of many such videos. [Links to the videos: here and here]

9. China & Pakistan– With the recent success of Bajrangi Bhaijan, PK and Dangal in China, is there any hope for increasing the entry of the number of Bollywood films in the Chinese market? Are there any talks to bring about a change in the four-film entry barrier?

The success story for Indian films in China is well known. Apart from film distribution opportunities, there are also co-production possibilities for both the industries which I believe does not fall in the quota system. Having said that, I see no reason why the entry barrier for Indian films in China cannot be changed specially with the love for Indian stories in China. It is win-win model as distributors and exhibitors in China make a killing on foreign films there.

What about Pakistan? While a huge chunk of Bollywood films get banned in Pakistan some have managed to get released there as well. Is there any hope for change in the Pakistani market?

Indian films played a major role in reviving the exhibition industry in Pakistan which has not only helped generate increased revenues for Indian films but even for the local film industry. It is unfortunate that the deteriorating situation resulted in impacting film trade which has not only harmed Indian films being legitimately screened in cinema halls but also the exhibition sector. It is important to note that this promotes piracy as the audience there would still aspire to watch Indian films through illegal modes. We have a similar situation in Bangladesh where Indian films are banned leading to closure of most of the cinema halls.

10. The South Indian film industry recently faced a shutdown over VPF. Is Bollywood facing similar issues? Could you explain this issue in further detail to us?

VPF is a grave issue for us and needs to be addressed on priority. The continuously increasing cost of distribution is significantly impacting revenues for the film producers. Technically speaking, the VPF model in India is flawed. One cannot keep paying VPF without a Sun Set clause. Hollywood has successfully followed the VPF model with a Sunset Cap which is also implemented in India whereas the VPF on Indian content as of date has no closure date which is unfair. Once the capital cost of projector and server is recovered by exhibitors/integrators by way of VPF as well as advertising revenues, the charges should therefore be capped to a small fee only for providing services.

11. Any parting thoughts for our readers?

The Film industry in India has been underperforming. Though we are the largest producers of films in the world whereas the revenues generated from theatrically exhibition are miniscule. India is one of the most under-screened markets in the world with less than 9000 screens in the country catering to almost 2000 films made almost in 30 languages. Most of the top grossing films in India are watched by less than 4% of the population. The limited expansion of multiplex cinemas is confined to fewer markets providing no access to the common man to experience films on a big screen. The growth story of the Film industry in China is an inspiring example. With almost 60,000 screens in China with a massive penetration in tier 3,4 & 5 markets has resulted in huge theatrical revenues. It’s heartening to see Dangal making a gross box office revenue of 200mn USD in China whereas its original Hindi version has generated less than 1/3rd of revenue in our country.

It’s time that the film industry in India is treated as a priority sector with the support it deserves by imparting industry status like any other growing industry by rationalising taxes, incentives to attract investments into infrastructure including cinema exhibition specially in smaller markets to facilitate growth of the industry to its fullest potential.