It is a pleasant task to write the Guest Editorial for this issue of India Law News (ILN) on the important and significant topic of the Hollywood—Bollywood relationship and the potential for growth. The two largest democracies in the world are also producers of the largest numbers of films. Hollywood is definitely the Big Brother, but India has improved significantly in terms of not just the numbers but also in terms of quality, content, technology, entertainment, vast reach in overseas markets, employment generation and financial growth. Hollywood and Bollywood need to develop compatibility and there are indications that mutual appreciation of each other’s strengths is being recognized.

Writing this column has not been difficult but finding the right authors has been an uphill task for me, as I wanted the best—those who know the subject and have intensely studied the subject matter of their respective contributions.

The Honorable Justice Mukul Mudgal, former Chief Justice of the Punjab and Haryana High Court has been a familiar name in sports and entertainment laws. He chaired the Committee Of Experts To Examine Issues Of Certification Under the Cinematograph Act, 1952, (the “Mudgal Committee”) appointed by the Ministry of information and Broadcasting to review the entire Cinematography Act, 1952.  I had the privilege of being a Member of this Committee. We travelled the length and breadth of the country to have inputs from various stakeholders like producers, directors, writers, artists, NGOs and the media. It is high time the Government has a serious look at the crucial recommendations made by the Committee. Justice Mudgal graciously agreed to write an article for this issue on the work of the Committee and we open with his article.

Our next article is by Ms. Leela Samson, a distinguished and renowned artist and head of art- related national institutions who has held the important position of Chairperson of Central Board of Film Certification (CBFC). It is common knowledge that the CBFC has been subject of controversy, which Ms. Samson discusses in her brilliant article in this issue.

We follow with an article by Mr. Anand Desai, head of DSK Legal.  Mr. Desai has in-depth knowledge of issues plaguing the film and entertainment industry of India. He holds a unique position of being India’s topmost lawyer in the field of entertainment and technology laws. Despite being a busy lawyer he agreed to contribute an article for this issue.

The same is true of the author of our next article. Mr. Amit Naik, Managing Partner of Naik and Naik, undoubtedly one of India’s top law firms specializing in film-related laws including compliance, electronic media and almost everything and anything to do with laws pertaining to entertainment related technology.

Next, we have been extremely fortunate in having Mr. Uday Singh, Managing Director, Motion Pictures Association of India provide us with the benefit of his vast experience of Hollywood and the connections with the Motion Pictures Association of the U.S.  His article touches upon all issues and aspects, which need to be looked into by the two governments and by industry leaders.

We close with a brilliant and well-researched article by three young but very eminent lawyers on tax-related issues. Samira Varanasi, Ranjana Adhikari & Rajesh Simhan are part of the world- renowned law firm Nishith Desai Associates, which, incidentally, has an office in California. Mr. Nishith Desai, the founder, is known for his expertise, inter alia, in tax matters, international tax treaties and bilateral relations.

I would like to use my prerogative as Guest Editor to express my own perspective on some of the key issues raised in this edition of India Law News, and comment on some of the great insights provided by our superb panel of distinguished authors.  I would particularly like to comment on the controversial subject of certifying films for public exhibition not only as a former Chairperson of the Film Certification Appellate Tribunal, but also as a member of the Mudgal Committee that issued its recommendations in 2013 calling for important changes in the certification process.

Certifying films is a contentious issue, and has become more so in recent times.  I have found that people in the business of certifying films are going beyond the law dealing with certification. The directive issued by CBFC Chairman, Pahlaj Nihalani, to cut out cuss words and scenes from films—now put on hold following protests from board members—went against the provisions of the Cinematograph Act. He had no business sending out a directive on what to delete from films. I believe a film has to be viewed in its entirety. You cannot knock out a kissing scene or a cuss word without looking into whether it is integral to the film. Cuss words are quite naturally spoken in States like Uttar Pradesh and Bihar. A scene or a word may appear vulgar mostly when taken out of context.

When I was the Chairperson of the Film Certification Appellate Tribunal (FCAT) from 2011 till nearly 2015, it was our responsibility to see that the orders of the CBFC (Board) pertaining to deletions and variations were sustainable in law. We often found that political films were subject to a lot of censorship. To give an example, there was a film on the plight of fishermen of Tamil Nadu, which was denied a certification by the Board. The film depicted how fishermen were being harassed by the Sri Lankan and the Tamil Nadu governments. The Appellate Tribunal found nothing wrong in the film. To give another example, the Board during my time struck out scenes and dialogues from Sadda Haq (2013) (in Punjabi, “Our Right”)—a film on the assassination of former Chief Minister of Punjab, Beant Singh. The Tribunal felt the movie was realistic, but we suggested a few cuts that were agreeable to the producer and the director of the film. Although three States, Delhi, Punjab and Haryana, banned the movie, the Supreme Court upheld our order.

I feel that the members of the Board must have some education in the field of art and cinema. It is fine to say that people from all walks of life will be represented on the Board. But there has to be some minimum education among the Board members, who are finally appointed by the Ministry of Information and Broadcasting.

There is no uniformity in certifying films for television and those that are exhibited in theatres. I find television gets away by showing films at odd hours and escapes certification in respect of tele-serials.

The Mudgal Committee was set up by the Government to review the Cinematograph Act, 1952. I was a member of the Committee. (As already mentioned, Justice Mudgal has graciously provided his own perspective on the work of the committee in an accompanying article in this issue of India Law News).  The Mudgal Committee suggested that anyone who had problems with the contents of a film should be able to approach the Tribunal. Justice Mudgal expressed the need for the jurisdiction of the Film Certification Appellate Tribunal (FCAT) to be enlarged to permit appeals by third parties, as under the mandate of the present legislation only the applicant for certification may prefer an appeal to the FCAT.  Presently, any other persons aggrieved by the decisions of the certification board are only left with the option of filing writ petitions before the High Courts pursuant to their writ jurisdiction under Article 226 of the Constitution of India) which results in conflicting case law.

There is the need for implementation of recommendations made by the Mudgal Committee as the same if implemented may resolve many of the problems and issues raised time and again by the film industry. The salient features of the recommendations are the constitution of screening panels, revised form of classification, certification of films, powers of the Central Government to supersede the Board, enhancement of jurisdiction of the FCAT and Appeal.

In his article in this issue of India Law News Justice Mudgal lamented the fact that despite the change in name from Central Board of Film Censors to the Central Board of Film Certification (CBFC), the same did not change the fate of the Film industry and CBFC still functions as a censor board and not as a certification board.

In his view, the composition of, and appointments to, the advisory panel, which reviews the film and suggests and recommends certification needs a refurbishment in terms of the qualifying criteria, and composition and mode of appointment. On several occasions panel members who are affiliated to particular political, social or religious group impose such political, religious or personal opinions on the content of the film. Thus, utmost care must be taken to ensure that the process of selection and appointment of such panel members is autonomous.

Justice Mudgal mentions that the present categories of classifications of U, A, U/A and S are insufficient given the innumerable subjects, complex themes and content of the movies being produced today.  More particularly, the category of U/A has been found to be inadequate and there is significant ambiguity as to the contents of the films that would classify as U/A.

The recommendations made to the Government which ought to be high on the agenda of the CBFC are holding orientation and cinema-education workshops for new advisory panel members, not allowing the Panel members to continue for more than two consecutive terms, introduction of a ‘mature’ slot or a water-shed hour on satellite television for adult content cinema, a voluntary by-line by the Producer to the certification describing the film and other such progressive measures and most of all, emphasizing the need to amend the existing Cinematograph Act of 1952, which would introduce one or two more certification categories like UA-15.

In her article in this issue, Ms. Leela Samson, the distinguished Chairperson of CBFC till early 2015 expressed the view that while the constitutional status of CBFC is that of a subordinate office under the administrative control of the Ministry of Information and Broadcasting, the functioning and the decision-making regarding film certification must be independent of any Government or non-governmental influence. It is the bounden duty of the Chairperson and the Board to ensure that this independence of the CBFC is not only maintained, but is also perceived as being maintained.

She also expressed that it is crucial that the Board Members, Advisory Panel Members and the officers of the Board are selected with utmost care. There is need for greater representation of the film industry, educated professionals of integrity with backgrounds in film, media, culture, the arts, science, journalism, law, social work, literature and education on the Board. She lamented the fact that though according to the rules of certification, two-thirds of the members of the Advisory Panel can be recommended by the Chairperson and the Board of CBFC, the names suggested never figure on the final lists made by the Ministry of I & B. She highlighted that the media has in the recent past noted the incompetence of the Panel members in judging Hollywood films.

She also stated that contrary to public perception, the Chairperson, CBFC does not see all the 1,500 films brought out in every language across the country each year. Rather, the Chairperson and the Board get to know the rating given to a film only when the CEO of the CBFC advises the Chairperson of a problem or when the press or an affected party bare their grievances to the media. Further, it is only when an aggrieved Director applies for a Review of his film, which is the second stage of the certification process, that the Chairperson is informed and he or she looks into a fresh panel that is now headed by a member of the Board or in some cases, the Chairperson himself or herself. It is, therefore, critical that the Advisory Panel members have exposure to films, arts, political forces at play, different religious beliefs, social and institutional processes and are able to understand and respond to the issues that cinema raises.

On the issue of creative freedom of expression and curbing violence during screening of films, Ms. Samson states that it is the responsibility of the State Governments to ensure law and order as there are small groups, churned up by political activists who create trouble with an issue to raise objection and use it as a tool to promote themselves. In the ultimate analysis, she states that if films must be certified in a free society, a process that filmmakers endorse for technical reasons, it is best that the Government in power disassociates itself completely from the process of certification.

One must stress on the importance of freedom of expression. In the U.S., freedom of speech is considered an integral part of American culture, and is protected by the First Amendment to the U.S. Constitution. The Motion Pictures Association of America, through the Classification and Rating Administration, issues ratings for films as “general audience,” “parental guidance,” “PG-13,” “restricted” and “adults only” ratings. I may also refer to Indian position wherein freedom of speech received a boost with the recent landmark judgment of the Supreme Court of India, striking down section 66A of The Information Technology Act (introduced by an amendment of 2008) as unconstitutional (See, Shreya Singhal vs. Union of India ([2015] 5 SCC 1 [March 24, 2015], the “Facebook” Case, discussed in Mr. Anand Desai’s article).

Mr. Anand Desai in his article in this issue has highlighted the global reach of the Indian market, stating that now even Hollywood studios have realized the potential of the Indian market, and large Hollywood studios including Disney, Fox, Sony and Warner Brothers have set up offices in India. The studios started with distributing Hollywood films in the Indian market, moved to producing Indian films, and have turned towards partnering with Indian studios either through co-productions, or formal corporate acquisitions like Disney-UTV. From a time when the entire Indian film industry was controlled by a few individuals and “film families”, there has been a clear shift towards corporates and studios managing the business. Decision making in the film industry has changed from instinctive, talent driven decisions, to defined processes, with emphasis on the quality of content, talent, production values, marketing, and distribution.

Mr. Desai highlights that India also offers economically viable world-class post-production facilities like VFX, 3D and animation. There has been a steady increase in the outsourcing of post-production services to India. Films like Avatar (2009), Life of Pi (2012), amongst others, were post-produced in India, and India is also becoming a favored destination for shooting films, and enables Hollywood studios to produce films in a foreign location at lower costs.

The Ministry of I & B has been contemplating putting in place a mechanism which facilitates international as well as domestic film producers, and has constituted an Inter-Ministerial Committee for Promotion and Facilitation of Film Production in India. The Committee will act as a “single window” for filmmakers seeking permission from different agencies of the Government of India for filming feature films, short films and TV programs. It will also provide relevant information on locations, crews, talent, facilities, stages, equipment and support services. Furthermore, the Government is also considering tax exemption incentive packages for foreign filmmakers. The Minsitry of I & B has recently issued fresh, simplified guidelines for foreign film shooting by foreign nationals and co-productions in India. Foreign artists engaged to shoot in India on a long term basis may apply for a “B-Visa” if the production is commercial in nature, or a “J-Visa” if the production is a documentary or pertains to journalism.

Mr. Desai states that Indian studios are exploring distribution practices like their Western counterparts, such as releasing and exploiting certain properties for a limited period and then withdrawing the properties temporarily to increase their monetization prospects. Another avenue is re-releasing old films after digitally restoring them. Indian studios are also looking at building franchisee properties, which can be exploited across platforms. Films like Krrish (first part released in 2006) and Chhota Bheem (premiered 2008) have attempted to explore merchandising opportunities, like Disney merchandised properties.

Online piracy continues to be a challenge for India and the US.  The Motion Pictures Association (MPA) has been taking anti-piracy actions against internet piracy, theatrical camcorder piracy, DVD piracy, etc. But this has a long way to go, requiring appropriate legislation and effective enforcement.

There exists tremendous potential for mutual cooperation between India and the U.S. in the field of entertainment, across all platforms, and Governments as well as industry participants can easily contribute for overall growth in this area.

In his article, Mr. Amit Naik expresses the opinion that international collaborations have seen Indian film companies tying up with Hollywood production companies for co-production of films in India. The entry of international studios has helped streamline processes, thereby resulting in better value creation for all stakeholders. India and U.S. have always been intertwined within the entertainment industry with Bollywood and Hollywood movies being shot in the U.S. and India, respectively. Dubbed versions of Hollywood films in regional Indian languages have also gained popularity. There is a significant growth in the number of VFX companies operating in India and Hollywood studios outsourcing VFX of their films to Indian VFX companies.

Mr. Naik refers to the fact that Indian cinema has always witnessed the production of remake or adaptations of films from Hollywood. Such remakes and adaptations, even if a scene-by-scene inspiration, were often made without acquiring rights or license from the original producer. Now after the case of Twentieth Century Fox vs. BR Films (2009) wherein the Bombay High court protected the copyright of a foreign studio in respect of the Hollywood Film, My Cousin Vinny (1992), leading to the first ever settlement for a Hollywood Studio. With the cognizance taken by producers of original films and stringent implementation of copyright laws, acquiring rights to produce an official remake or adaptation is a new trend and now there are several Bollywood films which are official remakes of Hollywood films.

Mr. Naik however laments that despite this noticeable connection shared between the two nations and their entertainment industries, no co-production treaty has ever been signed between them to promote the production of the Hollywood films in India and to promote production of Indian films in foreign countries. Recently the L.A. India Film Council was formed to facilitate and strengthen motion picture production, distribution, technology, content protection, and commercial cooperation between Hollywood and Bollywood. However a government initiative between the two nations is still awaited.

Additionally, insufficient knowledge about IPRs within India to tackle such problems arising from the infringement of such IPRs further deterred foreign investment in the Indian market. India is currently plagued with certain problems like piracy, corruption, heavy taxation on entertainment industry, no single window clearances, lack of film incentives, ambiguities in certification and copyright laws amongst others, which make foreign film makers reluctant to shoot or produce films in India. However, the slow and steady change in the Indian outlook towards protection of IPRs is the first sign that Indian market is ready to restart negotiations. It is, therefore, necessary that a co-production treaty be signed between the two nations which may include provisions such as cash grants, cash rebates, tax credits, exemptions from customs duty, and provisions to boost tourism, create employment opportunities, increase inflow of foreign exchange, and aid in the advancement of high-tech production facilities and equipment.

He concludes by referring to the progress of the association between the two nations which was more significantly marked by the recent visit made by President Barack Obama to India (25-27 January 2015), which was reflected in a Joint Statement which included recognizing the progress made in constructive engagement on IPR and enhancing engagement on IPR in 2015 under the High Level Working Group on IP, to the mutual benefit of both the countries. With the “Make in India” initiative adopted by Prime Minister, Narendra Modi, Mr. Naik hopes to see some positive reforms in India and co-operation from the U.S. to synergize the two biggest film industries in the world.

The contents of the article contributed in this issue by Managing Director of Motion Pictures Association (MPA) Mr. Uday Singh are from the “horse’s mouth.” No one could speak with greater authority and knowledge about Hollywood—Bollywood than Mr. Uday Singh, MPA being a prominent stakeholder in the film business between U.S. and India.

The author lauds the India-U.S. joint statement “Shared Effort, Progress for All,” which reinforces the need for continued dialogue and cooperation between copyright industries and the Government of India to build an effective IPR regime that encourages development and innovation in the Indian media and entertainment industry. India’s industry growth needs to be fueled by policies, which create a favorable legal and business environment for the development of IPRs in copyright industries.

While applauding the initiative by the Government of India for pushing forward a much-needed National IPR Policy that envisages IP as an integral part of India’s overall development policy, Mr. Uday Singh has highlighted the need for focusing on key areas that facilitate ease of doing business which include piracy control.  He points out that despite contributing ₹50,000 Crores ($8.1 billion) or 0.5% of India’s GDP to the country’s economy and supporting a significant 2 million jobs, the media and entertainment (film and television) sector is plagued by content theft and piracy. The lack of a robust legal framework and uniform enforcement measures to curb piracy in this sector continue to undermine the growth of India’s creative industries.

The author has suggested that in consonance with global practice, India needs to consider immediately establishing Film Commissions to act as one-stop-shops which could play a pivotal role in attracting foreign productions into country, cutting through red tape, facilitating film shoots, and coordinating with local government and filmmakers to provide all the necessary services for film shoots. On the tax front, the author emphasized the need for rolling on of Goods and Service Tax (GST) and subsuming the entertainment tax in it (as the existing entertainment tax structure is seriously flawed) and this would definitely make it easy for companies in the U.S. and India to do business—generate higher output and create more employment opportunities.

The article by Ms. Samira Varanasi, Ms. Ranjana Adhikari and Mr. Rajesh Simhan of Nishith Desai Associates, Mumbai is entirely a different contribution in contents from other contributions as this article deals with important issues of content distribution model for digital media and connected tax issues.

Until now digital revenue has been a relatively small portion of the revenues earned by the media and entertainment companies. However, the situation is changing and the digital business models and revenue streams have evolved significantly.  The authors have explained the key features of Over the Top (OTC) Content distribution, Internet Protocol Television and Content Delivery Network and then examined how digital trends influence the creation and management of content itself.

On the tax front, the authors have explained that notwithstanding whether the distributor of content is generating content or facilitating the distribution of content, internet and mobile-based content distribution models could be either user-revenue models or advertising-revenue models.

The article is of great topical relevance for U.S. companies.

We close with an article by Ms. Poorvi Chothani of LawQuest who discusses visa issues involving foreign artists wishing to work in India.

I am grateful to all the worthy contributors and I hope that the readers will not only enjoy the contents of this issue of ILN but also gain some useful learning.

The India Committee, and my friend Bhali Rikhye, the Editor of the India Law News, have helped make the ILN into a great resource center for legal issues, topics, subjects and legislations of mutual interest to lawyers in the U.S. and India.  I extend my thanks and appreciation to him for his collaboration with me in in producing this special issue on Hollywood—Bollywood.

LALIT BHASIN, LL.D., is a Senior Advocate at the Supreme Court of India and Managing Partner of Bhasin & Co, in New Delhi, which specializes in various areas of law including employment, foreign collaborations and investment, IT, Corporate Law, constitutional law, technology transfer agreements and dispute resolution.  Dr. Bhasin is one of the preeminent deans of the Indian Bar.  He was chairperson of the Film Certification Appellate Tribunal (FCAT) from 2011 to 2014. Among his long list of other positions of leadership are President of Society of Indian Law Firms, Vice President The Bar Association of India. and Founding Co-Chair of India Committee of the American Bar Association’s Section of International Law.  Dr. Bhasin was awarded Honorary Membership of the International Bar Association in Melbourne in 1994 for outstanding service to the legal profession. He was awarded the Plaque of Honour by the Prime Minister of India in 2002 for outstanding contribution to the Rule of Law. In 2007, the President of India presented him with the National Law Day Award for “Outstanding Contribution to the Development of the Legal Profession in India and for his deep involvement and engagement in the maintenance of the highest standards at the Bar”.