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India's Trade Potential in Audio-Visual Services And

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India's Trade Potential in Audio-Visual Services And WORKING PAPER NO. 81 INDIA’S TRADE POTENTIAL IN AUDIO-VISUAL SERVICES AND THE GATS ARPITA MUKHARJEE APRIL, 2002 INDIAN COUNCIL FOR RESEARCH ON INTERNATIONAL ECONOMIC RELATIONS Core-6A, 4th Floor, India Habitat Centre, Lodi Road, New Delhi-110 003 Contents Abbreviations....................................................................................................................... i Foreword............................................................................................................................iii Introduction ........................................................................................................................ 1 Coverage of the Sector........................................................................................................ 2 Objectives and Structure..................................................................................................... 2 1. An Overview ............................................................................................................. 3 1.1 Recent worldwide developments in audio-visual services ...................................................... 3 1.2 Audio-visual services in India............................................................................................... 19 2. Domestic and External Constraints......................................................................... 37 2.1 Domestic constraints ............................................................................................................. 37 2.2 External constraints............................................................................................................... 47 3. GATS and Audio-visual Services ........................................................................... 49 3.1 A brief overview of GATS.................................................................................................... 50 3.2 Coverage of audio-visual services under GATS ................................................................... 51 3.3 Discussion of commitments .................................................................................................. 52 4. Strategies for Current Negotiations......................................................................... 56 4.1 India’s trading partners and the type of restrictions imposed by them.................................. 58 4.2 Countries which have export interest in India and the type of restrictions they face ............ 59 4.3 India’s strategies for the GATS 2000 negotiations ............................................................... 64 5. Domestic Reforms................................................................................................... 68 Conclusion ........................................................................................................................ 78 Appendix A....................................................................................................................... 80 Appendix B ....................................................................................................................... 92 Appendix C ....................................................................................................................... 99 Appendix D..................................................................................................................... 100 References....................................................................................................................... 105 List of Tables Table A1 Employment in US Motion Picture Industry 80 Table A2 Country-wise Production of Films and Expenditure on Film Production in 80 the Year 2000 Table A3 Use of Recreational and Audio-visual Services across Countries 81 Table A4 Television and Multichannel Homes in Various Countries 82 Table A5 Music Sales for Various Countries 83 Table A6 Media Units/PSUs/Autonomous Bodies Under the Three Main Wings of 84 Ministry of Information and Broadcasting Table A7 Some Basic Statistics on All India Radio 87 Table A8 Commercial Revenue (Gross Revenue) of Doordarshan (1976-77 to 1999-00) 88 Table A9 Entertainment Tax Rate of Various Asian Countries 89 Table A10 Hit/Flop Rates of Hindi Films 89 Table A11 Countries with which India has Cultural Agreements 90 Table B1 Summary of Commitments in Audio-visual Services 92 Table B2 Commitments in Audio-visual Services for Each Mode of Supply 93 Table B3 Percentage by Sector and Mode of Supply- Audio-visual Services 94 Table B4 a) India’s Commitments in Audio-visual Services 95 b) India’s MFN Exemptions in Audio-visual Services 96 Table B5 Proposed Definition of the Audio-visual Services by the USA 97 List of Figures Figure A1 Total Entertainment Industry Revenue 91 Abbreviations ABS Australian Bureau of Statistics AFTRA American Federation of Television and Radio Artists AIR All India Radio ASEAN Association of Southeast Asian Nations BBC British Broadcasting Corporation BBFC British Board of Film Classification bn Billion CAS Conditional Access System CBFC Central Board of Film Certificate CCI Communication Commission India CD Compact Disc CEAC Copyright Enforcement Advisory Council CEAI Cine Exhibitors Association of India CFSI Children’s Film Society, India CPC Central Product Classification DBS Direct Broadcast Television Service DFF Directorate of Film Festival DTH Direct-to-home DVD Digital Video Disc EBU European Broadcasting Union E-commerce Electronic Commerce ETIG Economic Times Intelligence Group EU European Union Eurostat European Statistics FCC Federal Communication Commission FDI Foreign Direct Investment FICCI Federation of Indian Chambers of Commerce and Industry FIPA Federation of Indian Producers Association FTII Film and Television Institute of India GATS General Agreement on Trade in Services GCTV Global Connections Television GDP Gross Domestic Product GIC General Insurance Corporation ICCR Indian Council for Cultural Relations IDBI Industrial Development Bank of India IFPI International Federation of Phonographic Industry IMI Indian Music Industry IMPDA Indian Motion Pictures Distributors Association IPR Intellectual Property Right IPS Internet Services Provider IT Information Technology KBC Kaun Banega Crorepati LIC Life Insurance Corporation MFN Most Favoured Nation i mn Million MPA American Motion Picture Association MSOs Multi System Operators NDTV New Delhi Television NFDC National Film Development Corporation NRI Non-resident Indian OCB Overseas Corporate Bodies OECD Organisation for Economic Co-operation and Development OGL Open General License PBS Public Broadcasting Services PIB Press Information Bureau PVR Priya Village Roadshow RBI Reserve Bank of India SCRIPT Society for Copyright Regulations of Indian Producers of Film and Television SNG Satellite News Gathering SRFTI Satyajit Ray Film and Television Institute SW Short Wave TRAI Telecom Regulatory Authority of India TRIPS Trade Related Intellectual Property Rights TV Television TWF Television Without Frontiers UAE United Arab Emirates UK United Kingdom UNCPC United Nations Provisional Central Product Classification USA United States of America USTR United States Trade Representative VCD Video Compact Disc VOA Voice of America VRS Voluntary Retirement Scheme VSNL Videsh Sanchar Nigam Limited w.e.f with effect from WDI World Development Indicators WIPO World Intellectual Property Organisation WTO World Trade Organisation ii Foreword Audio-visual service sector is one of the fastest-growing service sectors in India and the country’s exports of audio-visual products have shown a rapid increase in the past decade. This study examines India’s potential for expanding trade in audio-visual services in the context of the ongoing GATS 2000 negotiations. It is a part of the Ministry of Commerce project “Trade in Services: Opportunities and Constraints”. This study shows that there is an increasing demand for Indian audio-visual products from regions with high non-resident Indian and South Asian concentration. India also has the potential of exporting post-production facilities, computer animations and graphics. Since the Indian audio-visual industry caters to a niche audience, India does not face any direct competition from major players such as the US. Based on these findings, the study recommends that it is in India’s interest to actively participate in the ongoing GATS negotiations and push for the removal of external barriers to trade. The study also recommends a number of domestic reform measures, which would enhance the efficiency, productivity and global competitiveness of this sector. I am confident that this paper will provide significant input to policy makers, industry associations and academicians working towards realising the potential of the audio-visual sector in India’s services trade. (Isher Judge Ahluwalia) Director & Chief Executive ICRIER April, 2002 iii Introduction∗ Audio-visual services play a crucial and formative role in any society. These services are closely linked to the preservation of cultural identity and social values, and play a major role in shaping public opinion, safeguarding democratic system and developing creative potential. Due to these reasons, governments of both developed and developing countries not only provide direct and indirect incentives to their domestic industries but also strictly regulate the content of audio-visual media. During the Uruguay Round of WTO (World Trade Organisation) negotiations, audio-visual service sector witnessed limited liberalisation.
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