Government Introduces Cash Incentives of up to USD 2,60,000 for Shooting Foreign Films in India and Co-Productions with Foreign Countries

The Ministry of Info and Broadcasting (MIB) has not too long ago introduced two schemes (“Schemes”) on the Cannes Movie Pageant, 2022. The Schemes have been launched to incentivise international collaborations with India and entice investments from international movie makers in India.1

These are:

  • Incentive for capturing of international movies in India : Below this scheme, an Worldwide Producer can declare a reimbursement of 30% of their Qualifying Manufacturing Expenditure up to INR 2 crore (USD 2,60,000). They’ll additionally declare an additional 5% bonus up to INR 50 lakh (USD 65,000) for using greater than 15% manpower from India.

  • Incentive for Audio-Visible Co-production with international nations : Below this scheme , official Indian Co-Productions can declare up to 30% reimbursement of Qualifying Co-Manufacturing Expenditure up to INR 2 Crores (USD 2,60,000).

The Schemes can be executed by the Movie Facilitation Workplace (“FFO”), which has been set up underneath the aegis of the Nationwide Movie Improvement Company(“NFDC”) to promote international collaboration in filmmaking and facilitate movie shootings by home and worldwide filmmakers in India.2

The salient options of the 2 schemes are mentioned under.

I. INCENTIVE FOR SHOOTING OF FOREIGN FILMS IN INDIA

This scheme has been launched to supply money incentives to an “International Producer” which is outlined because the entity accountable principally for all actions concerned in making the manufacturing in India. It’s typical for completely different producers on a challenge to play completely different roles. As an illustration, a producer could also be accountable solely for financing whereas one other is accountable for dealing with day to day creatives. In such instances, will probably be fascinating to see how the scheme will apply.

Below the scheme, an Worldwide Producer can declare a reimbursement of 30% of their Qualifying Manufacturing Expenditure (“QPE”) up to INR 2 crore (USD 2,60,000).3 They’ll additionally declare an additional 5% bonus up to INR 50 lakh (USD 65,000) for using greater than 15% manpower from India.4

Which tasks are eligible for the scheme?

As per the scheme, these tasks which have been granted permission by the MIB, or Ministry of Exterior Affairs (“MEA”) (for documentaries) after the 1st of April, 2022 are eligible to apply.5

Eligible productions could also be: 6

  • Function movies/animation characteristic movies: A minimal of 75 minutes in size

  • Actuality and industrial TV exhibits or sequence: a minimum of one broadcast half-hour in size, which is meant for preliminary industrial distribution in a medium aside from cinema

  • Internet exhibits or sequence

  • Put up manufacturing providers for tasks shot inside or exterior India

  • Documentaries: A minimal run time of half-hour.

The scheme clarifies {that a} challenge can be deemed to be a sequence or a season if the episodes characteristic a standard theme or themes and/or include dramatic components that kind a story construction. Every sequence or season is barely entitled to one reimbursement. It seems from the wording of the scheme that for completely different seasons, separate reimbursement could be claimed. It is a good incentive to shoot a number of seasons in India.

Who can apply?

The appliance underneath this scheme should be a line producer or a line manufacturing firm (“Line Producer”) based mostly in India, having a PAN quantity and a GST registration.7

The scheme offers that;

  • The Line Producer should be accountable for making all preparations for buying, hiring, and manufacturing associated expenditure on behalf of the Worldwide Producer.8 This requirement can have to be examined from a tax influence perspective.

  • The Worldwide Producer can have to declare reimbursement by the Line Producer.9 the Line Producer and the Worldwide Producer should enter right into a legally binding contract outlining the reimbursement software course of, and distribution of funds. A replica of the settlement is required to be furnished with the applying.10

Due to this fact, all Worldwide Producers in taking benefit of the scheme would want to essentially appoint a Line Producer in India to avail the advantages of this scheme

Who isn’t eligible?

Business or music movies, sports activities occasions protection, information and present affairs exhibits, journal exhibits, infotainment, speak exhibits and life-style programming and productions with main objective of fund-raising or coaching/in-house company promoting or promotions are usually not eligible underneath the scheme.11

The scheme additionally offers different standards for non-eligibility reminiscent of non-submission of a accurately audited monetary assertion of the manufacturing;12 or if the manufacturing outcomes in a damaging influence on the pure assets of India or the setting.13

QPE

QPE is outlined as expenditure incurred by the applicant (on behalf of the Worldwide Producer or in any other case) wholly in respect of the relevant pre-production, manufacturing (incl. principal images) and post-production, and attributable to the classes of items and providers sourced and/or offered in India. The language that that the expenditure incurred by the applicant may very well be on behalf of the Worldwide Producer “or otherwise” seems to imply that expenditures incurred by line producers which can be consequential and not a direct consequence of their obligations to the Worldwide Producer. The standards for figuring out QPE is ready out in the scheme.14

Software and Disbursal

The scheme offers the applying course of for claiming reimbursements. The principle steps are mentioned under:

  1. The Line Producer should then apply for an interim approval on behalf of the Worldwide Producer, not less than 4 weeks earlier than starting manufacturing associated actions in India.15 The paperwork to be offered alongside with the applying embody script/storyboard/therapy of the manufacturing, allow for filming in India, certificates of incorporate of the Worldwide Producer,16 capturing schedule, and many others.17

  2. The appliance can be evaluated by a Particular Incentive Analysis Committee (“SIEC”)18 publish which an Interim Approval Certificates can be issued with a validity of 12 months.19

  3. After acquiring the Interim Approval Certificates, the applying for reimbursement has to be made through a web based kind on the FFO web site – this should be carried out inside 90 days of the completion of the challenge by the applicant.20 The paperwork to be offered alongside with the applying embody endeavor from the Worldwide Producer with regard to the profitable completion of the challenge in India as per the permission letter given by MIB , certificates of an auditor i.e., an merchandise smart audited assertion, certifying the manufacturing bills incurred by the applicant in India.21

  4. The appliance will once more be evaluated by SIEC as soon as all paperwork are offered by the Applicant to FFO. The audited statements can be verified by an auditor appointed by the FFO. The choice of the SIEC can be last and can’t be challenged in any court docket of Legislation. The FFO is required to course of all purposes inside 60 days of receipt.

  5. On profitable analysis and audit, 85% of the eligible incentives can be disbursed to the applicant’s checking account.22 For disbursement of the remaining 15%, a duplicate of the ultimate credit that’s to be launched with the “Filmed in India” credit score and the FFO emblem in a distinguished place should be submitted.23

Different particulars

The scheme states that:

  • Cost can be on first-come-first-serve foundation.24

  • Cost can be topic to availability of allotted annual price range.25

  • Throughout the allotted price range for the monetary 12 months, the price range for “post-production only” tasks can be capped at 25% of the whole price range.26

  • FFO should be given a credit score in the top credit or finish crawl on all prints of the work created in the shape of “Filmed in India” credit score and FFO emblem as offered by FFO.

  • The FFO has the appropriate to examine and audit all books of accounts and data of the applicant which pertain to the reimbursement by a professional accountant.27

  • FFO has the appropriate to ask the Worldwide Producer to present materials reminiscent of testimonials from solid and crew members, behind the scenes footage, and different materials as could also be required to promote India as a filming vacation spot.28

II. INCENTIVE FOR AUDIO-VISUAL CO-PRODUCTION WITH FOREIGN COUNTRIES

This scheme incentivizes an “Official Indian Co-production” i.e. a manufacturing between India and a number of of the nations with whom India has an entered into an official bi-lateral co-production treaty on Audio-Visible Co-production, and which manufacturing has been granted official ‘Co-production Status’ by the MIB.2

The listing of nations with which India has official co-production treaties has been offered in Annexure I to Scheme II.30

Official Indian Co-Productions can declare up to 30% reimbursement of Qualifying Co-Manufacturing Expenditure (“QCE”) up to Rs. 2 Crores (USD 2,60,000).31 QCE contains expenditure on items and providers, amenities and personnel from India, which instantly contribute to the challenge.32

Which tasks are eligible to apply?

Tasks which were granted “Co-Production” standing by the MIB can apply. Documentaries, although eligible for this scheme, have to apply for permission to movie in India from MEA.33 Solely these tasks which have been granted ”Co-Manufacturing” standing after the 1st of April, 2022 are eligible underneath this scheme.34

Who can apply?

The applicant should be an Indian co-producer, i.e a person, partnership, physique company or unincorporated affiliation established and/or included in India.35 The scheme offers that none of the co-producers could be linked to one another by widespread administration, possession, or management “except to the extent that such link is inherent in the making of the co-production”.36 The wording of the scheme with respect to the hyperlink being “inherent in the making of the co-production” is barely unclear however the intent seems to be to exclude any hyperlinks between co-producers created for the aim of the challenge to be co-produced reminiscent of a three way partnership settlement particularly entered into for the aim of the co-production.

The scheme offers that every co-producer shall proceed to play an lively function all through the interval of manufacturing and assume accountability for carrying by sensible and monetary preparations for the challenge. The duty for “each co-producer” to be actively concerned could also be onerous. Sometimes, co-productions are structured in a means that completely different co-productions have completely different contributions in the challenge.

The scheme additionally states that corporations which exist solely in identify, also referred to as letterbox corporations are usually not eligible for reimbursement.37

The co-producers should enter right into a legally binding settlement with one another which replicate their roles, tasks, commitments, and liabilities.38

In case there may be a couple of Indian Co-Producer, events should designate an “Indian Delegate Co-Producer” who will deal with and coordinate operations and financing, and apply for the reimbursement.39

The scope of eligible manufacturing codecs is to be ruled by the related treaties.

Software and Disbursal

Purposes to avail of this scheme could also be made on the FFO web site – the place the required kinds have been offered.

Software and disbursal is a three-stage course of:

  1. The manufacturing which has been granted “Co-Production” standing by MIB wants to apply on-line with all of the supporting paperwork not less than 4 weeks earlier than the beginning of principal images inside India. The paperwork to be offered alongside with the applying embody allow for filming in India, doc displaying grant of official co-production standing in India and all associate nations, complete itemized price range, and many others..40 After being evaluated by a SIEC, an Interim Approval Certificates can be issued with a validity of 12 months.41

  2. After principal images commences, an software could be filed for disbursal of an quantity up to 50% of the eligible reimbursement. The SIEC, after evaluating the applying, will then launch the 1st disbursement.42 The paperwork to be offered alongside with the applying embody certificates from an auditor, i.e. merchandise smart audited assertion, certifying manufacturing bills in India.43

  3. After the challenge is full, an software could also be made for last disbursement as per the method set out in the scheme inside 90 days of completion.44

Different particulars

  • The reimbursement is topic to the supply of funds allotted for the given monetary 12 months.

  • Beneficiaries of this scheme should give credit score to MIB and the FFO/NFDC in the top credit or finish crawl on all prints of the work created.

  • Documentaries have to give credit score to MEA.45

  • The FFO has the appropriate to examine and audit all books of accounts and data of the applicant which pertain to the reimbursement by a professional accountant.46

  • FFO has a proper to publicize the filming of the challenge in India, and the applicant can have to help the FFO in this regard, as required.47 This contains offering pattern footage from the challenge, rushed pictures in India, and different materials to the FFO or the NFDC for their advertising and marketing functions.48

KEY TAKEAWAYS

Filming in India is not going to solely profit the media and leisure trade however can profit allied industries like tourism, hospitality as effectively. New Zealand witnessed a spike in tourism post-release of the Lord of the Rings films.49 Filming of international movies inside India could outcome in an identical influence.

What’s essential to word is that each Schemes include caveats that reimbursement is topic to the supply of funds. Due to this fact, fund allocation and correct implementation of the Schemes is vital. Whereas the Schemes are laudable, the federal government may also think about tax incentives like these provided by different nations reminiscent of UK, Eire, Fiji, Canada and Mexico for filming inside these nations.50 Tax incentives are one other means to entice international gamers into the nation. Present tax provisions associated to tax deduction at supply (TDS), Items and Companies Tax (GST), and many others. include sure points/gray areas with respect to international and Indian producers and members of solid and crew. Amending these provisions to deliver in readability will give additional impetus to filming in India.

(We acknowledge and thank Chirag Basu, Scholar Symbiosis Legislation College, Pune for his help on this hotline.)



1 See https://pib.gov.in/PressReleasePage.aspx?PRID=1826395

2 Part 1.1 of the Incentive for capturing of international movies in India (“Scheme I”)

3 Part 1.2 of the Scheme I

4 Ibid.

5 Part 2.1 of the Scheme I

6 Part 2.13 of the Scheme I

7 Part 2.8 of the Scheme I

8 Part 2.9 of the Scheme I

9 Part 2.10 of the Scheme I

10 Part 2.11 of the Scheme I

11 Part 2.14 of the Scheme I

12 Part 5.1 of the Scheme I

13 Part 5.4 of the Scheme I

14 Part 4 of the Scheme I

15 Part 3.2.1 of the Scheme I

16 The scheme offers that this doc is required to be notarized by related Government Company or Indian Embassy or Consulate

17 Annex to the Scheme I

18 The SIEC will represent of three everlasting members (Managing Director, NFDC; Head of FFO; Director Finance, NDFC) and three members appointed on task foundation (a monetary skilled, an trade skilled and consultant from the panel of line producers/line manufacturing service corporations enlisted with FFO offered on the web site of FFO at

https://www.ffo.gov.in/en/productions-directory/psc-line-producer

19 Part 3.2.5 of the Scheme I

20 Part 3.4.2 of the Scheme I

21 Annex to the Scheme I

22 Part 3.5 of the Scheme I

23 Part 3.6 of the Scheme I

24 Part 3.5 of the Scheme I

25 Part 1.7 of the Scheme I

26 Part 1.8 of the Scheme I

27 Part 6.4 of the Scheme I

28 Part 6.8 of the Scheme I

29 Part 1.4 of the Incentive for Audio-Visible Co-productionwith international nations (“Scheme II”)

30 The nations with whom treaties have been signed are: Bangladesh, Brazil, Canada, China, France, Germany, Italy, ,Israel, Korea, New Zealand, Poland, Spain, UK, Russia, Portugal (See Annex I to Scheme II).

31 Sections 1.6 and 1.7 of the Scheme II

32 Part 4 of the Scheme II

33 Part 2.3 of the Scheme II

34 Part 2.2 of the Scheme II

35 Part 2.4 of the Scheme II

36 Part 2.6 of the Scheme II

37 Part 2.10 of the Scheme II

38 Sections 2.7 and 2.8 of the Scheme II

39 Part 2.9 of the Scheme II

40 Annex 2 to the Scheme II

41 Part 3.4 of the Scheme II

42 Ibid.

43 Annex 2 to the Scheme II

44 Ibid.

45 Part 6.1 of the Scheme II

46 Part 6.6 of the Scheme II

47 See ‘Submission of Materials’ in Scheme II

48 Ibid.

49 https://discovery.cathaypacific.com/middle-earth-film-tourism-changed-new-zealand/

50 See https://investmentpolicy.unctad.org/investment-policy-monitor/measures/588/mexico-

introduces-tax-incentives-for-foreign-film-production-;

https://www.businessworld.in/article/Film-Incentives-Adopted-by-India-Other-Countries/17-02-2022-420852/

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