Indo-UK film treaty disappoints producers

CINEMA The treaty will not offer any tax sop to Indian producers but benefit film processing labs

The India-United Kingdom co-production film treaty, to be signed next month, offers no tax incentives or any defined benefits to the Indian film producers. The treaty took three years of bilateral talks and over 10 overseas visits by the officials concerned from India and the United Kingdom to formalise.

However, once the treaty comes into effect the film processing labs in the country may get direct access to post-production contracts at international rates, according to industry sources. "A direct impact of the treaty will be that more film makers may start registering their films in the UK and release it as a UK film rather than an Indian film," a film analyst said.

Internationally, any co-production treaty entitles film makers to get tax incentives and access to government funding at nominal interest rates. But Indian laws do not offer any financial sops to any co-production films normally unless the film is of national importance.

Under a co-production treaty between two countries, at least 20 per cent finances of a film are borne by the film company of one country while the rest comes from the other country. Also, the film should have technicians, actors, producers from both the countries.

For Bollywood and Indian film producers the UK offers good shooting locations as out of 10 films that are shot in Europe, six are shot in the UK and also use the country's logistical support. Besides, a number of south Indian films have started using the UK locales. Hence, this treaty will help a cross section of Indian film producers.

"Indian film producers, however, will be able to claim tax incentives under the UK laws if they register their production as a UK film," a source said.

Also, according to the terms of the treaty, the UK film companies would get direct access to labs in India for processing of films. According to industry estimates, while the processing charges per print in India costs about Rs 60,000 (about 750 pound sterling), in the UK, its double the amount.

"The treaty will help the country's film processing labs bag more international projects at competitive rates. But we will not give any financial incentives to the Indian film producers here," an official in the Ministry of Information & Broadcasting told Business Standard.

According to analysts, the Indo-UK co-production treaty will help a number of medium and small producers make cross-over movies in collaboration with British film companies.

Under the UK film finance laws, there are two major tax breaks for UK films made under co-production treaty or otherwise. The first is S.48 which allows producers to write off the production cost of films costing less than £15 million in one year; and S.42 that enables a three-year write-off of production costs for films of any budget. These can be claimed by the Indian film producers once the treaty comes into effect next year.