As Budget 2025 approaches, so does expectations of rate cuts and benefits. Industry leaders are expecting Finance Minister Nirmala Sitharaman to announce provisions to boost their individual sectors on February 1. Media and entertainment industry is no exception. The industry players are calling for lowering taxes on movie tickets to boost footfalls in cinemas which remain lower than pre-Covid levels. They expect the government to emphasize on policies which can spur growth in the advertising sector.
Recently, Sanjay Jaju, Secretary, Ministry of Information and Broadcasting, Government of India highlighted the worth of the media and entertainment industry which currently stands at three lakh crore. The sector grows at a rate which is much faster than that of India's economy, he said. However, excluding the pandemic (2020 and 2021), theatres saw the biggest drop in footfalls at 88.3 crore last year.
However, Arghya Chakravarty- Chief Operating Officer, Shemaroo Entertainment, said that while India is expected to become the third largest media and entertainment market from fifth largest currently, M&E industry’s contribution to India’s GDP remains less than 1 percent. "This leaves significant headroom for accelerated growth when compared to the 3 to 4 percent GDP contribution of many developed markets like the US, UK, Japan," he said.
Drive footfalls, cinema screens
Theaters are in dire need of measures to rationalize GST (goods and services) on tickets which would make going to the cinemas more affordable, said Devang Sampat, Managing Director, Cinepolis India.
India's top multiplex chain is also expecting lower GST on cinema tickets to enhance affordability and drive footfalls.
"A more predictable and streamlined regulatory environment will enable sustained investments in cinema infrastructure, fostering long-term growth for the industry,” said Gaurav Sharma, Chief Financial Officer, PVR INOX Ltd.
Sampat also expects financial incentives for the construction of multiplexes to address India's low screen density, making cinema more accessible across regions. "Streamlining licensing procedures through a single-window clearance system would significantly ease operational challenges and allow exhibitors to focus on expansion and service quality," he added.
In addition, financial incentives for the development of multiplexes can help expand reach and cater to untapped markets.
A rationalization of GST rates, particularly for cinema tickets, which are currently taxed at 18 percent could boost footfalls and revive the cinema exhibition segment post-pandemic, noted Yasin Hamidani, Director, Media Care Brand Solutions on the M&E Sector. The 18 percent GST on media and entertainment services like OTT (over the top platform) subscriptions and broadcasting could also be reduced to make content consumption more affordable, he added.
Interest-free loans or subsidies for such projects can further boost local economies and entertainment access, added Hamidani. He has called for introduction of tax incentives or deductions for investments in domestic content production which can encourage regional storytelling.
India's screen count until last year was around 5,500 single screens and 4,000 multiplex screens. However, experts note that the country has 6,500-7,500 serviceable screens. Only 1,200-1,300 screens are estimated to get added in the next five years.
"An increase in the allocation of funds corpus towards the international production subsidies by the Indian government will have huge potential to attract more international movie and show production to India," Mautik Tolia, Managing Director, Bodhitree Multimedia, said.
He added that a greater boost towards the OTT platform - Waves started by the government with special emphasis on regional content will give more opportunities to younger content creators.
Ad recovery
The advertising spends especially on television have been subdued due to lower spends by one of the top categories - FMCG. Zee Entertainment chief executive officer during December quarter earnings call said that he hopes that Budget 2025 will revive consumption cycle which will spur ad growth.
Last year marked one of the harshest years for advertising, particularly for traditional platforms, pointed out Shemaroo Entertainment COO Arghya Chakravarty.
"This was primarily driven by rising inflation and softer consumption demand which impacted the marketing budgets of leading advertisers. To boost advertising revenues, it is crucial for the government to support the health of direct-to-consumer industries, which are key contributors to advertising spending," he added.
Global economic cues have been weak, FII (Foreign Institutional Investor) outflows from the larger equity markets have left an impact and lower consumption trends are seen as the reason for FMCG slowdowns and the banking space has seen some challenges, noted Harikrishnan Pillai, CEO and Co-Founder, TheSmallBigIdea, marketing agency.
He said that the next six months will be critical to figure out if the 10 percent growth is an element of celebration or a decoy delaying the tough times to come.
In 2024, Indian advertising industry recorded 10.2 percent growth higher than the projected growth of 9.5 percent, reflecting a moderate to positive sentiment in India.
However, Pillai pointed out that 2025 is not a year of big elections and that there are only two major elections scheduled for 2025, (Delhi and Bihar). "I don’t expect a significant push in government expenditure on advertising as compared to the previous two years. I am expecting some hope and relief to come by in the form of grants and subsidies for entities using technology for growing respective categories."
Kunal Lakhra, chief financial officer (CFO), Pocket Aces, an entertainment company, expects the government to spend more on digital media campaigns.
"Setting aside more money for public awareness programs in healthcare, education, and digital skills can boost demand for the ad services. Partnering with the private agencies to run these campaigns can create jobs. Clear-cut tenders and paying agencies on time can help smooth out operations and build trust among stakeholders leading to steady growth in the industry," he added.
Rishabh Mahendru, VP - Client Success & Growth, AdLift, a digital marketing agency expects reduction in GST for digital marketing which currently attracts 18 percent.
"Programs supporting skill development in areas like AI-driven ad optimization and creative technology could empower agencies to innovate and adapt faster. A blend of financial relief and forward-thinking policy could help the ad industry bounce back stronger," he added.
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