India has huge potential to position itself as a significant provider of animation production services. Indian animation market size, in fact, is expected to touch $1.5 billion by 2005, according to a report complied by the National Association of Software and Service Companies on the industry.

The report, which was released by Andhra Pradesh Chief Minister Chandrababu Naidu at the one-day summit -- Animation India 2003 in Hyderabad on Friday, outlined a four-pronged strategy to help the Indian animation industry to more than double its size in the next three years.

Nasscom president Kiran Karnik said, "Though the animation industry in India is at a nascent stage, it is rightly poised to tap the burgeoning global demand for animation services."

"India has the world's largest entertainment industry, a robust software industry and also skilled manpower, which are the essential for this sector to grow. But there are challenges in terms of increasing awareness, skills and manpower development, infrastructure and financial support, which would require industry and government to partner," he pointed out.

The Nasscom president said that the study by the apex body has identified and recommended the imperatives for growth of the animation sector. To promote the development of original animation production by Indian studios and increase the level of interest of audiences in domestic market, Nasscom has put forward certain recommendations.

The study emphasised the need for developing a national brand identity in the subject and style of animation, strengthening interface between local studios and producers and international distributors, establishing presence in major international animation markets, entering into co-production treaty with countries such as Canada, and arrangements with producers/studios in the United States, creating assured offtake of locally produced original animation productions by domestic broadcasters and increasing the base of domestic viewers, apart from finding newer applications for animation.

To make Indian animation industry world-class, there is a need to develop and strengthen the supply base of animation production studios by importing hardware and software equipment.

Nasscom recommended making imports of hardware and software required for studios custom duty free. The study suggested collective bargaining with overseas IT equipment vendors to get the best possible prices.

Moreover, Nasscom wanted the government to set up animation parks, on the lines of software technology parks, replete with shared infrastructure facilities to reduce capital investment per player.

There is also a need to establish studio space for short-term hire to help small sized companies and experienced animators who may have budgetary constraints. The government also needs to provide Indian IT companies with incentives to undertake product development effort in animation software.

To create funding mechanisms to encourage the development of original animation productions, Nasscom has recommended creating a special funds body for extending soft loans to original animation productions, granting industry status to the animation sector to enable it to gain access to funding from banks and financial institutions and setting up of a fund for original concept development and developing manpower capability in scriptwriting.

Nasscom also made recommendations for developing a base of manpower talent and capability in well-defined areas, by enhancing the demand for animation as a career option among the student population through education and events and increasing availability of training institutes that focus on animation. The government should look at providing financial assistance for private animation institutes.

According to the Nasscom study, the global animation production market is poised for major growth. The study, based on multiple statistical projects on the market, forecasts that the global animation market will generate revenues worth $50 billion to $70 billion by 2005. Animation production by Indian producers is expected to touch $1.5 billion by the same year.

The Indian animation industry also has a good outsourcing opportunity. In Asia Pacific, India is emerging as an important outsourcing destination due to its obvious benefits such as large English speaking base, availability of animation capability with 12 animation studios, presence of a successful entertainment industry, heritage of traditional literature to facilitate content-based partnership and state-of-the-art computer hardware and software platforms.

Another primary advantage is that the cost of animation production in India is the lowest compared to other destinations like Canada, Korea, Taiwan and Philippines. India can not only catch up with these competitors, it can easily exceed their potential.

The various end user segments of animation that constitute the opportunity areas for animation producers in India are feature film production, TV programmes, advertising/ commercials, games, online education, CAD/CAE, and industry specific applications (architecture, medical, legal/ insurance, etc).