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U.S. generates 40% of overseas revenue for Indian film

industry

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Lack of details on Trump's order sparks confusion, fear

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Producers fear tariff could double cost of exports to U.S.

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India has become hub for production, visual effects

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Plan could speed shift to direct-to-digital releases

By Haripriya Suresh, Saurabh Sharma and Rishika Sadam

BENGALURU/NEW DELHI/HYDERABAD, May 7 (Reuters) - India's

film industry, which earns roughly 40% of its overseas revenue

from the United States, sounded the alarm this week about higher

costs after President Donald Trump threatened a tariff of 100%

on all movies produced beyond American soil.

Film makers, producers and distributors in one of the

world's largest film industries by output struggled to weigh the

likely impact of such a tariff as Trump provided scant details,

stirring more questions than answers.

"The real question is how the term 'foreign produced' will

be defined, and until that's clear, it's hard to say anything,"

said film maker Anubhav Sinha, known for his Netflix ( NFLX ) streaming

series, "IC 814: The Kandahar Hijack".

"It's not yet clear whether services like post-production

will be affected."

India's film industry employs 272,000 people, with overseas

box office takings of about 20 billion rupees ($237 million) in

fiscal 2024, or a tenth of total earnings, Deloitte and studio

grouping the Motion Picture Association said in a report.

Key Hollywood films with India scenes are Oscar-winners such

as the rags-to-riches tale "Slumdog Millionaire", and the Osama

bin Laden manhunt thriller, "Zero Dark Thirty", along with

rom-com "Eat, Pray Love", and Batman outing "The Dark Knight

Rises".

In the absence of details on the planned levy, film

producers worry it could double the cost of exporting their

films to the United States, where people of Indian descent are

estimated to number 5.2 million.

"The United States is one of the most important overseas

markets for Indian cinema, largely due to the substantial

diaspora," said producer Madhu Bhojwani, reponsible for hits

such as "Airlift", on workers evacuated from Kuwait during the

Gulf War.

"Any increase in ticket prices resulting from these tariffs

would directly affect audience turnout, compounding the

challenges posed by evolving consumer behaviour and broader

industry headwinds."

The cost-effective South Asian nation has also grown in

stature as Hollywood's preferred hub for on-ground production

and post-production services, especially in visual effects,

since it offers a skilled talent pool.

"Almost 10 to 15 (foreign) movies are shot in India every

year, and our movie industry will be impacted very badly," said

film trade analyst Komal Nahta.

LIKELY HIT TO REVENUE

Prominent Indian actor and producer Prakash Raj called

Trump's move "tariff terrorism".

If the tariff covers post-production services, the

consequences will be bigger, added Bhojwani, the co-founder of

Emmay Entertainment and Motion Pictures.

"We can expect a potential decline in outsourced work from

U.S. studios to Indian vendors, which could have notable

implications for the Indian media services sector," she said.

"If revenue from the U.S. drops, it could affect budget

planning and profitability for Indian production houses," said

Pradeep Dwivedi, chief executive of Eros International Media

.

"Big-budget films counting on overseas revenue could be

restructured or scaled back."

The move will also hurt smaller releases in the United

States.

"Even a 30% drop in revenue for such mid-scale movies would

be a significant dent," said Raj Kandukuri, producer of a

well-regarded film, "Pelli Choopulu", in India's southern

language of Telugu.

"There are a sizeable number of students in the United

States who watch movies, they will not spend high on ticket

prices."

The planned levy might also drive a broader shift to digital

platforms.

"U.S. distributors might be less inclined to pick up Indian

titles due to the increased cost," Dwivedi said.

"This could result in fewer screens, smaller releases, and a

shift toward digital platforms instead of theatrical. The tariff

would likely accelerate a move toward direct-to-digital releases

on platforms like ErosNow, Netflix ( NFLX ), Amazon Prime, and Hulu."

($1=84.2560 rupees)