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The Embassy of Iceland in India
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India: Opportunities
Unlimited
Rahul ChongthamTrade Representative
5 November 2009
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India is a union of states with Parliamentary
system of Govt.
28 States & 7 Union Territories
Land Area: 3.29 Million sq.km
Population: 1.2 Billion
Language: English & Hindi
Independence Day: 15 August 1947
Republic Day: 26 January 1950
GDP (PPP) US$ 3.29 trillion (2008 est.)
GDP (Official exchange rate) US$ 1.21 trillion(2008 est.)
Age structure:0-14yrs ( 31%)15-64 ( 63.6%)65 years & over ( 5.3%)
India : Basic Facts
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India: Fastest Growing Free Market Democracy
9.50% 9.70%
9.00%
6.70%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
2005 - 2006 2006 - 2007 2007 - 2008 2008 - 2009
GDP Growth
GDP Growth
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World Bank Growth Forecast For 2009
5.10%
7.20%
-4.5%
-3%
-6.80%
-8.00%
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
8.00%
India China EU US Japan
GDP Growth
India China EU US Japan
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GDP Composition by Sector (2008 2009)
57.30%17%
25%
Services
Agriculture
Industry
Growth in sectors 2005 - 2008
Indicators 2005 -06 2006 - 07 2007 - 08 2008 -09
gri & Allied 5.80% 4% 4.90% 1.60%
Industry 10.20% 11% 8.10% 3.90%
Services 10.60% 11.20% 10.90% 9.70%
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India: An Attractive Investment Destination
World Investment Report 2008 fromUNCTAD affirms India as the secondmost attractive FDI destination in theworld.
Top 5 Sector attracting FDI are:- Services- Computer Software & Hardware- Telecom- Housing & Real Estate- Construction sectors
FDI is open to almost all sectors.
9
22.8
34.4
41.5
0
5
10
15
20
25
30
35
40
45
2005 -06 2006 - 07 2007 - 08 2008 -09
Foreign Direct Investment
US $ Billion
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India Overseas Direct Investment (ODI)
5.04
13.1
18.417.7
0
2
4
68
10
12
14
16
18
20
2005 -06 2006 - 07 2007 - 08 2008 -09
US $ Billion
Increase in Indias ODI is due to large scale acquisitions byIndian companies growing appetite for an overseas presence andhunt for energy assets .
65% of ODI was routed through tax-friendly countries.
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Major M&A Deals Undertaken Abroad by India Inc.
USD 12.1 billionUSD 12.1 billionTata Steel buys Corus PlcTata Steel buys Corus Plc
USD 6 billionUSD 6 billionHindalco acquired Novelis Inc.Hindalco acquired Novelis Inc.
USD 1.58 billionUSD 1.58 billionEssar Steel acquired Algoma SteelEssar Steel acquired Algoma Steel
USD 730 millionUSD 730 millionVideocon Industries acquired Daewoo
Electronics Corporation Limited
Videocon Industries acquired Daewoo
Electronics Corporation Limited
USD 1.6 billionUSD 1.6 billionSuzlon Energy Ltd. acquires REpowerSuzlon Energy Ltd. acquires REpower
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Major M&A and Investments Announcements in India
USD 11 billionUSD 11 billionVodafone buys HutchVodafone buys Hutch
USD 0.98 billionUSD 0.98 billionAditya Birla Group increased its stake in Idea
Cellular by acquiring 48.14-percent stake
Aditya Birla Group increased its stake in Idea
Cellular by acquiring 48.14-percent stake
USD 1 billionUSD 1 billionPlans investment in private equity, real estate, andprivate wealth management
Plans investment in private equity, real estate, andprivate wealth management
USD 1.7 billionUSD 1.7 billionPlans to spend on its development operations in
India over the next four years
Plans to spend on its development operations in
India over the next four years
USD 0.905 billionUSD 0.905 billion
Renault, Nissan and Mahindra & Mahindra has
initiated a Greenfield automobile plant project in
Chennai.
Renault, Nissan and Mahindra & Mahindra has
initiated a Greenfield automobile plant project in
Chennai.
Mylan Laboratories acquired a majority stake in
Matrix Laboratories
Mylan Laboratories acquired a majority stake in
Matrix LaboratoriesUSD 0.74 billionUSD 0.74 billion
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Movement of Indias Foreign Exchange Reserve
050
100
150
200
250
300
350
March
1991
March
2006
March
2007
March
2008
March
2009
Sep 2009
5.8
151.6
199.2
309.7
251.9280.98
Foreign Exchange Reserve
US $ Billion
Increase in FDI and FII has facilitated an increase in forex reserves.
Increase Forex Reserves has enabled prepayment of certain highcost foreign currency loans of the government.
It offers adequate security against any possible currency crisis ormonetary instability.
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India: Vibrant Capital Market
0
5000
10000
15000
20000
25000
25Jul,1990
15Jan,1992
11Feb,2002
7Feb,2006
6July,2007
8Jan,2008
22Jan,2008
23July,2008
17Oct,2008
18Dec,2008
18May,2009
23Jul,2009
7Sep,2009
30Sep,2009
BSE Sensex
BSE Sensex
The Sensex breached the 17000 mark on 30th September 2009 asFII inflows continued to flood the market. This level was last seenin May 2008.
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India: Foreign Trade
0
50
100
150
200
250
300
2005 - 06 2006 - 07 2007 - 08 2008 - 09
103.1126.3
163 168.7149.2
185.6
251
287.8
Export Import
Indias Merchandise Exports/Imports
*All figures in US $ Billion
0
20
40
60
80
100
120
2005 - 06 2006 - 07 2007 - 08 2008 - 09
57.7
73.8
90.1
101.2
34.544.3
52.5 51.4
Export Import
Indias Services Exports/Imports
Petroleum products are the major
contributors towards Indias growingimports
Services sector has been a major
contributor for the increase in exportsfrom India.
Quality and cost advantage are twoimportant parameters leveraged by theIndian producers to market their products and services
* All figures in US $ Billion
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Merchandised Trade between Iceland & India
*All figures in US $ Million
Main Export items:
Animal and vegetable fats and oils, organic & inorganic chemicals, rawhides and skins, animal hairs, machinery and mechanical appliances etc.
Main Import items:
Organic chemicals, pharma products, rubber and leather articles, saddlesand harness, apparels and clothing accessories, iron and steel, toys,games and sports requisite etc.
Particulars 2003-04 2004-05 2005-06 2006-07 2007-08
Export 9.53 2.3 6.32 3.73 3.78
Import 17.6 12.91 13.05 11.48 13.77
Total Trade 27.13 15.21 19.37 15.21 17.55
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Fifth-largest telecom networkin the world; second largestamong the emerging economies.
The Indian telecom industry
generated revenues of approximately US$ 32 billion in200708 with a growth rate of 60per cent over previous year.
It witnessed a CAGR of
approximately 29 per cent from200203 to 200708.
Indian Telecom Industry
9
10
11
15
20
43
0 10 20 30 40 50
2002 - 03
2003 - 04
2004 - 05
2005 - 06
2006 - 07
2009 - 10 (E)
Revenues of Indian Telecom Industry:
2002-10
US $ Billion
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The mobile subscriber base in India islikely to reach 500 million by 2010.
On an average, over 8 million users areadded per month, making India theworlds fastest growing wireless services
market.
The subscriber base grew at a CAGR of43.6 per cent from June 2004 to June 08.
As on June 2008, India had a tele-
density of 28.33 per cent. Tele-density inthe rural areas is even lower at 9.2 per cent.
The government is promoting telecommanufacturing by providing tax sops and
establishing telecom-specific SEZs.
Indian Telecom Industry
76.53
104.22
153.42
225.01
325.79
0 100 200 300 400
2004
2005
2006
2007
2008
Telecom Subscriber Base in
India
Subscribers in Million
7.049.61
13.9619.86
28.33
0
10
20
30
2004 2005 2006 2007 2008
Teledensity in India
Per Cent
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The total number of internet subscribers grew from 9.22 million inJune 2007 to 11.66 million in June 2008.
BSNL is the largest Internet Service Provider followed by MTNL.
Indian Telecom Industry
Top Five Internet Service Providersby Market Share (as on June 2008)
50.96%
16.49%
7.47%
7.07%
4.84%
BSNL MTNL Bharti Airtel Reliance Sify
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Market Share ofWireless Operators in India
(as of June 2008)
15.00%
1.00%
24.00%
18.00%
17.00%
9%
9%
4%
2% 1%
BSNL MTNL Bharti Airtel Reliance Vodafone
Idea TATA Aircel Spice Others
Bharti Airtel has crossed 100 Million subscriber mark in May 2009.
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Opportunities for Telecom Companies
3G Services
Worldwide Interoperability for Microwave Access (WiMax)
Managed Service
Virtual Private Network
Enterprise Telecom Services
Rural Telephony
Value-Added Services
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IndianTelecom Industry
Recommendations
The VAS segment will offer ample opportunities to Icelandiccompanies keen on tapping this sector. Demand for good VAScontent providers from mobile operator is expected to increase whenthe 3G spectrum rolls out early next year. We will see more VAS in
banking, gaming, advertising, mobile commerce applications whichwill improve margins over current SMS value added services.
The Embassy of Iceland in India can assist Icelandic companies tomarket their products and services as well as identify potentialIndian partners for JVs.
Participating in trade exhibitions such as India Telecom-International Exhibition & Conference will provide the right exposurefor Icelandic companies to enter the Indian telecom sector.
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Indian Energy Sector
Installed capacity: 145,440 MW as on September 2008.
Thermal - 64%
Hydro - 25% Other Renewables - 8%
Nuclear - 3%
State Sector - 53%
Central Sector - 34% Private Sector - 13%
Coal is the dominant source contributing 53% of the energygeneration in the thermal segment.
Besides hydro energy, wind energy dominates the renewable powergeneration in India
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Indian Energy Sector
Projected Growth
Present Per capita Consumption 631 kwh
Per capita Consumption by 2012 1,000 kwh
Peak demand Estimation by 2012 157 GW
Investment requirement by 2012 USD 100 Billion
Generation USD 50 Billion
Transmission & Distribution USD 50 Billion
Power for all by 2012
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Indian Energy Sector
Capacity Addition Targets & Achievements
Five Year Plan Year Target Achievement
Eighth Plan 1992 - 1997 30,538 16,423
Ninth Plan 1997 - 2002 40,245 19,015
Tenth Plan 2002 - 2007 41,110 21,180
Eleventh Plan 2007 - 2012 78,577 N.A.*
In the first 2 years of the Eleventh Five Year Plan only 12500 MWwas added.
The current power shortfall in India is 15000 MW.
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Indian Energy Sector
Small Hydro Project (SHP) upto 25 MW
Total installed capacity of Hydro Power in India 36,348 MW.
Indias exploitable Hydro Electric potential is estimated to be 150,000MW. So far only 23% of this potential has been harnessed.
An estimated potential of about 15,000 MW of SHP exist in India.Ministry of New & Renewable Energy identified 5415 potential sites withan aggregate capacity of 14,305.47 MW for projects up to 25 MWcapacity.
The government has fixed a target to add 1400 MW during the 11th Plan
(2007-12).
Year Target (inMW)
Capacity additionduring the year (in MW)
Cumulative SHP installedcapacity
2007-08 200 205.25 2180.84
2008-09 250 248.93 2429.77
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Indian Energy Sector
StateWise Identified Small Hydel Sites And Potential Up To 25MW Capacity (as on 31.3.2009)
S.No Name of State IdentifiedNumber of Sites
Total Capacity ( InMW)
1 Andhra Pradesh 489 552.29
2 Arunachal Pradesh 566 1333.04
3 Assam 60 213.844 Bihar 94 213.75
5 Chhatisgarh 164 706.62
6 Goa 9 9.1
7 Gujarat 292 196.97
8 Haryana 33 110.059 Himachal Pradesh 547 2268.41
10 Jammu & Kashmir 246 1411.72
11 Jharkhand 103 208.95
12 Karnataka 128 643.16
13 Kerala 247 708.1
14 Madhya Pradesh 99 400.58
15 Maharashtra 253 762.58
16 Manipur 113 109.1
17 Meghalaya 102 229.81
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Indian Energy Sector
StateWise Identified Small Hydel Sites And Potential Up To 25MW Capacity (as on 31.3.2009)
S.No Name of State IdentifiedNumber of Sites
Total Capacity ( InMW)
18 Mizoram 75 166.94
19 Nagaland 99 196.98
20 Orissa 222 295.4721 Punjab 234 390.02
22 Rajasthan 67 63.17
23 Sikkim 91 265.54
24 Tamil Nadu 176 499.31
25 Tripura 13 46.86
26 Uttar Pradesh 220 292.16
27 Uttaranchal 458 1609.25
28 West Bengal 203 393.79
29 A&N Island 12 7.91
TOTAL 5415 14305.47
23 States have announced policies for setting upcommercial SHP projects through private sector participation.
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Indian Energy Sector Geothermal Energy
Indian Geothermal provincescan produce up to 10600 MW ofpower.
Government has identified 340hot springs in the country and
are planning to develop some ofthe Geothermal fields for powergeneration.
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Indian Energy Sector Geothermal Energy
International consultant, GeothermEx Inc., USA has identified hasidentified 6 most promising Geothermal sites for development inorder of the following ranking:
Tattapani in Chhatisgarh
Puga in Jammu & Kashmir
Cambay Graben in Gujarat Manikaran in Himachal Pradesh
Surajkund in Jharkhand
Chhumanthang in Jammu & Kashmir
National Hydro Power Corporation (NHPC) has been appointed by
the government as the nodal agency to promote geothermal energyin India. NHPC plans to develop 2 to 5 MW geothermal power plantat Puga.
Chhatisgarh Renewable Energy Development Agency (CREDA) is
currently developing the Tattapani geothermal site.
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Indian Energy Sector
Key Players
(i) National Hydro Power Corporation (ii) Tata Power (iii) ReliancePower (iv) Jaiprakash Hydro Power (v) L&T (vi) Bhilwara Energy (vii)Athena Energy & (viii) State renewable energy agencies such asCREDA, OREDA, etc.
Recommendations:
As most renewable energy projects in India are with the StateGovernments, Embassy of Iceland in India can assist Icelandiccompanies to approach the concerned State Governments.
The Embassy can also facilitate link-ups with Indian energy
companies for possible JVs.
It would be beneficial for Icelandic energy companies to participatein trade exhibitions such as the Renewable Energy India Expo.
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Indian IT & IT Enabled Services Sector
Total IT revenues reached US$ 64billion in 2008-09 growing at 33 percent over previous year.
Contribution of IT/ITeS industry toIndias GDP has grown from 1.2 percent in 1998 to an estimated 5.5 percent in 2008.
BFSI vertical continues to accountfor the largest share of exports at 31per cent. Telecom vertical accountsfor second largest share of the pie at19 per cent.
40.8
23.2
Exports Domestic
Revenue segmentation of IT/ITeS sector in 2008 (US$)
IT/ITeS industry: On a steady growth track
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Indian IT & IT Enabled Services Sector
Size of the domestic market in 2008was US$ 23.2 billion.
Hardware accounted for about 50per cent of the total domestic IT-BPOspend.
Direct employment for four millionand indirect employment for 10 to 12million by 2015.
IT/ITeS industry: On a steady growth track
11.5
7.9
2.2
1.6
Hardware IT Services Software BPO
Indian domestic market, 2008(US$ billion)
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Indian IT & IT Enabled Services Sector
Key Indian IT Players in the Sector
Tata Consultancy Services, Wipro, Infosys, HCL Technologies, TechMahindra, Patni Computer Systems, I-Flex solutions Ltd, L&T Info Tech Ltdand Polaris Ltd.
TCS won a US$1.2 billion IT & operations support deal from the NielsenCompany.
British Telecom awarded a US$1 billion contract to Tech Mahindra.
GM awarded Wipro a 5-year contract valued at US$300 million
ABN AMRO awarded a US$500 million 5-year contract to TCS, Infosys &Patni Computers.
Infosys won US$250 million outsourcing deal from Philips Electronics.
Large Off-Shoring Contracts
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Indian IT & IT Enabled Services Sector
Costadvantage
Cost of an engineer is about 20 40 per cent of comparable cost inEuropean Union (EU)
Selling, general and administrative costs approximately 80 per cent ofcomparable cost in EU Average offshore billing rate of US$ 20 to 35 per hour; about 50 to 70per cent lower than EU
Ease of scalability
675,000 technical graduates per annum, of which 4,00,000 areengineers Over 50,000 MBAs graduating per annum Leading firms add more than 10,000 new employees per annum
Global and 24/7 delivery capability
India: Value proposition
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Indian IT & IT Enabled Services Sector
Domestic Market
Overall size of the domestic market in 2008 was US$ 23.2 billion. It iscurrently growing at 20 per cent.
Domestic IT market is dominated by the hardware spending accountingfor over 50 per cent of the total spending.
Government is taking up e-governance initiatives and increasing its ITspends/outlays
Demand for domestic BPO services increasing rapidly, with nicheverticals like healthcare and retail fast gaining traction apart from thetraditional verticals ofBFSI and manufacturing
Key Opportunities
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Indian IT & IT Enabled Services Sector
Knowledge Process Outsourcing (KPO)
KPO opportunities exist in R&D, business & technical analysis,animation and design, business market research, etc.
Engineering services outsourcing
Range of services includes engineering and designing solutions acrossdiverse industry verticals like telecommunications, automotive,construction, aerospace, utilities and industrial design.
Legal Process Outsourcing
Over 1 million lawyers and over 70,000 law graduates passing out everyyear; Cost arbitrage -Indian lawyers billing one-tenth of their UScounterparts (US$ 40 to $60 in India compared to US$ 350 per hour in theUS).
Key Opportunities
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Indian IT & IT Enabled Services Sector
Research and analytics
India emerged as the choice destination for their front-end research andanalysis divisions, migrating from the back-room services off-shoring.
Testing services outsourcing
Indian export revenues from software testing services were estimated atUS$ 385 million in 2006-07.
Software products
Indian software products segment presently forms a very smallpercentage of the overall Indian IT-ITeS industry. Top 10 companiescontributed 85 per cent to segment revenues.
Key Opportunities
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Indian IT & IT Enabled Services Sector
Recommendations
Embassy of Iceland in India can assist Icelandic companies tomarket their products & services to the fast growing Indian domesticmarket.
Trade associations like NASSCOM, FICCI & CII can facilitatemeetings & link-ups with Indian companies.
Indian Embassy in Iceland can be approached for information ongovernment projects such as National e-Governance Plan.
Icelandic companies can showcase their products & services byparticipating in trade exhibitions like Convergence India.
Business Consultants.
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Indian Food Processing Sector
Size of the food processing sector was USD$ 70 Billion in 2005 andis expected to reach USD$ 90 Billion in 2012.
India accounts for only 1.5% of the international food trade.
Only 2% of agri-produce is processed.
Sector declared high priority by the government and has set atarget to double process food production by 2015.
Huge investment opportunities in food processing technology and
equipments.
India is the worlds second largest producer of food.
Product Quantity Rank
Milk 90 million tonnes Highest in the world
Fruits & Vegetables 150 Million tonnes 2nd largest
Livestock 485 million Largest
Poultry 489 Million
Food Grain 204 million tonnes 3rd largest
Fish 7.5 million tonnes 3rd largest
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Indian Food Processing Sector
One of the largest producer of food in the world.
India has diverse agro-climatic conditions and has a large anddiverse raw material base suitable for food processing.
Rapid urbanization, increase literacy and rising per capita have allcause rapid growth and changes in demand patterns, leading totremendous new opportunities for exploiting the large latent market.An average Indian spends about 50 per cent of householdexpenditure on food items.
Indias comparatively cheaper workforce can be effectively utilized
to setup large low cost production bases for domestic and exportmarkets.
Excellent opportunities exist in fruit & vegetable processing, meat,fish & poultry processing, packaging, convenience food & drinks,milk products.
Advantage India: Food Processing
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Indian Film Industry
Indian film Industry is the Worlds largest in terms of filmsproduced as well as the number of cinema-goers. It produces almostas many films as the US, Japan and China combined.
India dominates world of Films
Country
No. Of Feature FilmsProduced
Theatre Admissions(In Million)
Average TicketRate (US$)
India 1132 3290 0.5
US 520 1364 7.2
Japan 418 161 11.7China 400 196 2.2
France 240 190 8.8
Germany 185 129 9
Spain 173 108 8.4
Italy 155 112 8.5
Rep of Korea 113 151 5.9
UK 102 164 9.5
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Indian Film Industry
FICCI-KPMG study values the Indian Film Industry at USD$ 2.11billion and projects its growth at 9.1% till 2013.
Opening of the film industry to foreign investment has led to manyglobal production units entering the industry.
Recent Collaboration:
- Dreamworks Studios and Reliance ADA Group production deal valued atUSD$ 825 Million
- Walt Disney and Yash Raj Films are partnering to produce animated films.
- Warner bros is currently funding film projects.
- Sony pictures entertainment recently co-produced a film with SCB Films.
The number of countries wooing Bollywood is increasing. Exoticlocations experienced film crews and tax breaks are amongst theincentives being offered by these countries.
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Thankyou