India is set to become the next major growth opportunity for the international exhibition industry, following a ruling by the chief minister of the state of Maharashtra exempting multiplexes from the punitive entertainment tax for the next three years, with a 75% discount for the following two years.
The announcement was made at the Enter Media 2001 Conference organised by the Confederation of Indian Industry (CII) on the entertainment industry. Minister Vilasrao Deshmukh said that it was his wish to develop the region into a gateway to several other countries. Geographically midway between Europe and the Middle East, it could play an important role in providing up-linking facilities, he added.
The entertainment tax exemption will be applicable only to cinemas with a minimum of four screens and a capacity of more than 1,200 seats.
India's high entertainment tax has historically been the main reason for international cinema operators' reluctance to invest in the territory. Low ticket prices and an overburdened infrastructure have been further obstacles to the development of the local exhibition sector.
Hitherto the importing of cinema equipment such as projectors, seats and concessions hardware was also subject to the entertainment tax. Indian cinema-goers currently absorb some 37% of the tax in the price of their tickets,
The Theater Owners Assn. and Cinematograph Exhibitors Assn. of India, have denounced the government rule as discriminatory. As a result, some 70 single-screen cinemas in Bombay closed their doors for one day as owners protested against the new tax policy. Single-screen operators currently pay 60% entertainment tax