Indian Animation Companies Need Subsidies Too!

Indian Government Cheese

I mention in numerous articles how many post production facilties in various countries exist in part because of huge government subsidies that lure US production companies overseas to do business there. I also mention that the fallacy of outsourcing is the dwindling cost advantage. As workers in India becomes highly skilled in vfx and just as good as an artist in the US or UK, those artists will want to be paid just as well too. It’s part of the reason why I see many of them come to the US: They want to rise to the top not race to the bottom.

There was an article posted on the TAG Blog about growth in the Indian animation industry:

The Indian animation industry will grow at a compounded annual rate of 30 per cent to reach a market size of $1.7 billion by 2012 and add over three lakh skilled animators, an industry lobby said Monday.

This is according to Associated Chambers of Commerce and Industry. Now ask yourself, would an industry lobby for Indian Animation companies ever release a study that puts their client in a bad light? Of course not. So why the fluff piece?

According to a study conducted by the Associated Chambers of Commerce and Industry, the domestic animation industry will undertake all its production activities within India instead of spending its funds in US, Canada, Malaysia and the Phillippines for making advanced animated movies.

The problem with India isn’t the talent there, it’s that producers go there because they have one thing in mind: CHEAP. As wages rise in India, Indian Animation company executives have actually admitted that they would outsource their own work to other countries in Southeast Asia where costs are lower. This is what brings me to the ah-ha moment of the article:

However, the chamber expressed concerns that the growth might be restricted due to the shortage of manpower and specialized training institutes, lack of government funding, hi-tech studios and tax incentives.

With the rise in costs for Indian vfx and animation companies, there is a need to lobby for government subsidies to maintain the cost advantage over markets like Malaysia and the Philippines where labor is cheaper. The argument that somehow vfx quality can go up and costs can go down seems to be a mythical obsession.

Soldier On.

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