‘It’s a crippling blow for movies’
Siddharth Roy Kapur, the new president of the Film and TV Guild, says the GST’s 28% bracket for film tickets is a setback
Over the last few years, we have been making very strong and cohesive representations. SIDDHARTH ROY KAPUR, PRODUCER
After a successful stint with two of the biggest film studios — which saw him produce films such as Rang De Basanti (2006), Dev.D (2009), Barfi!(2012) and Dangal (2016), among others — Siddharth Roy Kapur has now branched out to set up his own production company, Roy Kapur Films.
In a freewheeling chat, we catch up with Kapur, who was unanimously elected president of The Film and Television Producers Guild of India, about his new avatar and other crucial issues facing the film industry.
As the president of the guild, what’s your take on the government’s decision to put cinema tickets under the 28% tax bracket in the Goods and Services Tax (GST) regime?
It’s a huge setback for the film industry. In the existing tax regime, entertainment tax was the only tax imposed on cinema tickets by states and local bodies, with the average entertainment tax collected nationally by the government across all states and languages being in the range of 8-10% of gross box-office revenue. So, logically the GST rate should not have been more than 12% in order to avoid any exchequer loss. Instead, the government has equated the film sector with the gambling and betting industries and taxed it at the highest slab of 28%.
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In addition to this, local bodies across states have also been empowered to impose entertainment tax, which was earlier to have been subsumed within GST. Effectively, this means that in a state like Maharashtra, with an existing entertainment of 45%, the total tax on a cinema ticket could be as high as 70% if the local body chooses to go with the existing state entertainment tax rate. With such lack of support from the government, the Indian film industry, which should be one of the primary forms of cultural outreach from India to the rest of the world, finds itself in real danger of coming undone. This will be a crippling blow to the industry if it is not immediately rolled back.
Also, over the past few years, industry people have complained that film industry hasn’t been focused on much in the government’s budgets too. Is it frustrating?
It’s highly frustrating. Yes, we need to acknowledge that we could have historically done a better job of representing ourselves [to the government]. But over the last few years, we have been making very strong and cohesive representations. I think the government should realise that they shouldn’t look at this industry purely in terms of what it is contributing to the exchequer right now, because that is really negligible compared to our potential to contribute [to economy] in the future, if incentivised properly.
You can look at the glass as half full or half empty. I am an optimist. I prefer to look at the glass half full. But, we have to acknowledge the glass half empty too. This is an industry that has been around for a century. But, unfortunately, despite being a full-fledged industry, we are not given that respect. We are still governed by archaic rules that relate to cinema licensing. To get a license, a cinema owner needs 120 different permissions. There are still colonial era rules that say a cinema should not be near a place of worship or a school, which is really bizarre in today’s day and age. Today everyone has access to entertainment on a mobile phone. So, you are actually increasing the barriers of entry for people who are investing in this business. Piracy is taking away a large chunk of the growth of this business. It is not something that the government has made a concerted effort to address. The IT Act needs to be amended in order to be able to have stringent rules against online piracy. Perhaps the most important issue is taxation. We’re still considered, in many ways, a ‘sin’ industry and taxed accordingly. Cinema is the cheapest form of mass entertainment in this country. I think it is very important for the government to acknowledge that. For millions of people this is the one form of entertainment they have access to. Rather than imposing caps on ticket prices, the government should focus on high taxation and try to reduce it. This will lead to a spurt in the growth of the industry. We have got 8,000 screens in India, compared to 40,000 in China. In 2005, we had more screens than China. That is a staggering statistic. It just tells you the kind of incentivisation that the Chinese government has given to the local industry to grow their screens. Hollywood has been the soft power of the US, enabling multiple generations around the world to grow up on American pop culture and to look at America as aspirational. China has now seen that opportunity as well. Our government is forward thinking, and they do want to modernise and take India’s story to the world. I think if they can look at the soft power of India as being something cinema could enhance, they will look at it less as a ‘sin’ industry and more as something that can be part of the ‘Make in India’ campaign. I really feel passionately about this, and on behalf of the Guild, we’d like to do all that we can to talk to the powers that be, to let them know that if these steps are taken, they can lead to a surge in creativity and a surge in the ‘India story.’ The problem is taxation. If the tax rates are lower, the cinema prices will come down automatically. But as soon as the government gets into demand and supply equations and tries to tilt the balance, one way or the other, you are not letting market forces speak for themselves, and you are actually curtailing future investment from the exhibition sector because you are telling them how much money they can make or what their margins should be. I don’t think that’s the role of the government, especially in a free market like India. The government can really help in reducing the oppressive tax regime that exists currently, which will lead to an organic reduction in ticket prices. It makes us feel all of the above. A big film is vulnerable when it is about to release because, unlike any other medium, it’s got around 4,000 different touch points across the country, which are exposed to the threat of physical violence. When you are exhibiting your movie, the producer is very vulnerable and is only in a position of reaching some sort of an understanding with those who are actually the aggressors. The local government, in such cases, needs to make a very strong statement that such acts of intimidation and violence will not be tolerated. When that doesn’t happen, these forces, who’re trying to get their 15 minutes of fame, get emboldened and feel that they have the latitude to act at will, thinking there will be no consequences.
The local government needs to make a strong statement that acts of intimidation and violence will not be tolerated. SIDDHARTH ROY KAPUR, PRODUCER