SECTOR PROFILE

WHY INDIA?01

CHAMPION SECTORS02

PROFILE03

INVESTMENT OPPORTUNITIES04

BUSINESS & REGULATORYENVIRONMENT IN INDIA

05

WHY INDIA?01

ADVANTAGE INDIA

Worlds largest democracy with

1.3 billionpeople

Expertise acrossa spectrum of

services

Largecompetitively-priced skilled

talent pool

Large andgrowing domestic

consumermarket

Demonstratedcapability to deliver

high-quality,cost-effective

solutions

Integrated taxstructure

Enablingbusiness

environment

Focus oninfrastructuredevelopment

Access totechnology

INDIA - A FAVORED INVESTMENT DESTINATION

Fastestgrowing major economy in the world in 2018 and 2019

6th largest economy in the world by nominal GDP and 3rd largest economy globally by PPP

1st rankglobally in inward greenfield FDI inflows in 2016

India ranks 8thin global services exports accounting for 3.4% ofworld trade incommercialservices

Services,

57%

Automobile, 5%

Pharma, 4%

Power, 4%

Others,

26%

Chemicals, 4%

Agriculture17%

Industry22%

Services61%

6.1

60.1Mauritius, 34%

Singapore, 17%

Japan, 8%

%UK, 7%

USA, 6%

Netherlands, 6%

Others,22%

India’s GDP is likely to touch USD 5 trillion by 2025

2.6

4.7

2017 2023

GDP in current prices (US$ Trillion) GVA share of sectors in FY18

43.2

163.1

27.8

95.7

2004-05 2016-17

Exports

Imports

Services Trade (US$ Billion)

14%

10%

1%

1%74%

Category-wise Services Export (2016-17, % share)

17%

15%

1%1%

66% Travel

Transport

Insurance

G.n.i.e

Miscellaneous*

Category-wise Services Import(2016-17, % share)

Gross Foreign Inflows-FDI (US$ Billion) Top FDI source countries (% share in inflows- Apr’00 to Mar’17)

G.n.i.e- Government not included elsewhere; * includes software, business, financial and communication services

20

04

-05

20

05

-06

20

06

-07

20

07

-08

20

08

-09

20

09

-10

20

10

-11

20

11

-12

20

12

-13

20

13

-14

20

14

-15

20

15

-16

20

16

-17

Sector-wise FDI inflows (% share in inflows-Apr ‘00 to Mar’17)

75

60

45

30

15

0

Source: IMF, FDi intelligence report 2017, RBI, WTO

GROWTH ENABLERS

Growing domestic consumer base Large, young human capital base

Rising disposable income and urbanization More than 800 million people under the age of 34 years

Urb

an p

op

ula

tio

n (%

of

tota

l)

Pe

r-c

ap

ita I

nc

om

e (

INR

)

18,523

61,855

27.8

31.270000

60000

50000

40000

30000

20000

10000

0

32.0

31.0

30.0

29.0

28.0

27.0

26.0

2001 2011

Urban Population and Per-capita Income

Per capita income Urban population

Per-capita Income data pertains to 2001-02 and 2011-12Source: Census 2011, MOSPI

Size of the workforce (millions)*

37

35

27

1400

1200

1000

800

600

400

200

0

Korea Thailand Japan US Europe China India

2015 2025 (Projected) 2050 (Projected)

49

47

36 77

71

55

213

217

235

492

466

405

1008

984

795 860

985

1145

* Population aged 15-64 yearsSource: United Nations population statistics

CHAMPIONSECTORS

02

Transport

& Logistics Healthcare Accounting

& Finance

Construction

& Related

Engineering

Services

Media &

Entertainment

Education

Services Financial

Services

Environmental

Services

Tourism

& Hospitality

IT & ITeS Legal

Services

Communication

Services

((( (((

INVESTMENT ANNOUNCEMENTS IN MEDIA AND ENTERTAINMENT INDUSTRY

• Star India has committed to investing USD 5 billion in the Indian market, out of which USD 2 billion is specifically for Direct-to-

Home TV distribution

• Zee has invested in excess of a million USD in the new Over the Top (OTT) service, Zee5.

• OTT platform Viu has invested in production of the film ‘High Jack’ for theatrical release. This has opened a new source of finance

for cinematic productions.

• Spotify has committed to invest several million USD in India in its investor presentation in April 2018.

PROFILE:MEDIA AND ENTERTAINMENT

03

INDUSTRY OVERVIEW

The media and entertainment (M&E) industry consists of nine

prominent services – TV, digital media, gaming, animation and

visual effects (VFX), Out of Home advertising (OOH), music, radio,

films, and print.

The M&E industry, synonymously taken as the media and

entertainment industry, is among the key creative industries in a

country.

The M&E industry grew at a Compound Annual Growth Rate

(CAGR) of 18.55% from 2011-17, to reach approximately USD

22.75 billion in 2017

The unique style of M&E content produced in India appeals to

individuals in many societies world over, such as India’s

neighboring countries and countries with large Indian diaspora.

SIZE OF THE SIX LARGEST M&E INDUSTRIES IN THE WORLD AND INDIA

Country Size of M&E industry (USD billion) (2016)

Share of M&E industry in country’s GDP (in %)

World

USA

China

Japan

Germany

UK

France

India

1900

712

190

157

97

96

69.3

27.3

2.50

3.82

1.70

3.17

2.79

3.62

2.81

1.21

Source: US Department of Commerce, Economic Times and World Bank. Available At: https://www.trade.gov/topmarkets/pdf/Top%20Markets%20Media%20and%20Entertinment%202017.pdf

INDUSTRY STRUCTURE

• Television services have the largest

share in the M&E industry’s total

revenue at approximately 44.81%.

• Print and film services occupy the

second (20.57%) and the third

(10.59%) positions.

Share of each industry in total revenue: 2017

TV Digital Advertising Gaming

OOH Music Radio

Print Live Events

Animation and VFX

Films

44.81

8.08

2.04

4.41

2.31

0.881.77

10.59

20.57

4.55

GROWTH RATES OF TV, FILM AND PRINT SERVICES IN INDIA

• The growth rates for print services remain fairly stable in the given period, at an average of 7.37 %.

• In 2017, the growth in print services saw a sharp decline from 7.02 % in 2016 to -0.1%, majorly due to a shift of

consumers and advertisers to digital media.

6.6

15.6

10.8

12.512.7

13.8 14.2

8.5

12.2

-14.5

-6.7

11.5

21.0

11.5

0.9

9.5

2.8

9.6

1.9

10.18.2

7.38.5

8.4 7.6 7.0

-0.1

-20

-15

-10

-5

0

5

10

15

20

25

2009 2010 2011 2012 2013 2014 2015 2016 2017

Year

Growth rate-TV Growth rate-Films Growth rate-Print

Gro

wth

rate

(in

%)

Source: Koan Advisory Research

FOREIGN DIRECT INVESTMENT (FDI) EQUITY INFLOWS (IN MILLION USD)

• FDI inflows in the information and broadcasting

(I&B) industry, as indicative of the M&E industry,

have more than doubled from USD 675.95

million in 2011-12 to USD 1,516.68 million in

2016-17.

• These inflows amount to an increase from

1.92% share in the overall services sector in

2011-12 to 3.49% in 2016-17.

• The major drivers of these FDI inflows in the

industry are higher returns to capital at a

moderate risk because of increasing demand

and rising digitization of the industry.

• Moreover, with the advent of more foreign-

oriented and niche content, the industry holds

promise for attracting more FDI into the

industry, along with an increase in subscriptions

world-wide.

Source: Department of Industrial Policy and Promotion, 2018

1.91.8 1.8

0.8

2.5

3.5

0

1

2

3

4

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Year

I&B

as

a %

of

tota

l serv

ices

FDI is permitted upto 100% on Automatic route in M&E sector subject to applicable laws/regulations security and

other conditions except Broadcasting Carriage Services, Broadcasting Content Services and Print Media

SUB-INDUSTRY WISE DISTRIBUTION OF EMPLOYMENT IN THE M&E INDUSTRY IN INDIA (2017)

• The M&E industry employed close to half a million people in 2013, and these employment numbers are likely to increase to

0.65 million in 2017 and further to 1.3 million in 2022, at a CAGR of 12.5% over 2013-22 (National Skill Development

Corporation (NSDC), 2015).

• NSDC (2015) estimates also suggest that the film services alone employ approximately 25% of the people employed in the

M&E industry.

• Most of this employment in film services is of freelance/contractual nature rather than of regular and full-time nature.

Source: NSDC, 2015

Ind

ust

ries

0 0.1 0.2 0.3 0.4 0.5 0.6 0.7

Radio

Animation, VFX and Gaming

Print

Films

Television

All industries

Employment level projected for 2017 (in millions)

INVESTMENTOPPORTUNITIES

04

GROWTH DRIVERS

• Low cost of production: The cost of producing a full-length animated movie in India is

significantly lower in India compared to other international locations

• Diversity of content and talent: India hosts a large number of cultures and languages,

making it a prime source for M&E service.

• Burgeoning market: Increasing purchasing power, high rate of smartphone penetration

(even at a lower level), and a vast populace make India a high-growth M&E market.

India has the second largest number of TV households in the world at 183 million, second

only to China.

AVENUES FOR INVESTMENT

• Video on demand platforms are gaining popularity among consumers and present an

attractive opportunity for investment.

• Innovations in distributing content made for traditional media platforms have proven to be

highly profitable.

• Other technologies for TV content distribution such as ‘Head end in the Sky’ and ‘Internet

Protocol Television’ remain relatively unexplored in India.

• Content aggregation platforms for regional languages are a promising opportunity for

investment.

• Investments in skill development institutes for aspirants in the M&E industry, especially for

digital media, are bound to perform well in a country with a large working-age population.

BUSINESS &REGULATORY ENVIRONMENTIN INDIA

05

REFORMS FOCUS

Fiscalprudence andaccountability

Integratedtax

regime

Enabling Ecosystem

Servicespush

Job creation and inclusive

growth

REGULATORY ENVIRONMENT - INDIA

Foreign Investment Framework

• Governed by Foreign Exchange Management Act, 1999

• Progressive liberalization in the policies

• Automatic route (No prior approval requirement) such as railway and road infrastructure

• Approval route (Prior government approval required before setup) such as multi brand retail trading

Foreign Direct Investment (FDI) in India

Evolution of foreign investment regulations

FDI INVESTMENT ROUTE

Under Automatic Route Prior Approval Route

No requirement of any prior regulatory approval

Filing an intimation with RBI in prescribed format within 30

days of investment

Filing particulars of issue of shares within 30 days of issue

of shares to foreign investors

Filing an intimation with RBI in prescribed format within 30

days of investment

Filing particulars of issue of shares within 30 days of issue

of shares to foreign investors

Required approval from Govt. of India – Considered by respective Administrative Ministry/Department.

BUSINESS PRESENCE IN INDIA - FORM OF ENTITIES

Establishes local presence

Operates as a foreign company

Foreign Company

Liaison Office Project Office Branch Office Joint Ventures Limited Liability Partnership

Wholly Owned Subsidiary

Key considerations for choosing

investment vehicles

• Commercial considerations

• Regulatory framework (prior approval requirements for Chinese companies)

• Tax considerations

• Cost of operations{

This Report has been prepared by CII.

IT & ITES