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India's Bollywood Reaping Benefits of New Investment

In India, some of the country's biggest companies are making huge investments in the Hindi film industry, popularly known as Bollywood. Anjana Pasricha has a report from New Delhi, on India's booming film industry.

The latest venture of automobile manufacturer Mahindra and Mahindra conglomerate, is unrelated to its main business. The company is getting ready to launch a string of Hindi films, such as "Mumbai Chaka Chak," and "Acid Factory" early next year.

It is not the first Indian company to make a foray into the glamorous world of Bollywood, which churns out more than 1,000 films a year.

In recent years, some of the country's biggest businesses have begun tapping into the huge potential of the Hindi film industry.

It is a big change from a decade ago, when cash-strapped Bollywood producers raised money from private investors, and often had to rely on unaccounted for cash to fund their projects.

Amita Sarkar, heads the entertainment division at the Federation of Indian Chambers of Commerce and Industry. She says companies began looking at Bollywood as a business investment after it was designated as an industry in 2002, eligible for formal funding.

"For a creative person earlier, the biggest obstacle was money, which is not there at all now," she explained. "There are so many corporates, there are so many banks, financial institutions, they are waiting for projects, waiting for people to make good films. There is a lot of market for films, internationally as well, so the risk element has gone down substantially ... the money is no longer a very big problem."

Bollywood films are popular not just in India, but also in a host of Asian countries such as Pakistan, Indonesia and the Middle East. They also bring in big money in countries like the United States and Britain, where many Indians have migrated.

This big movie-going audience is not just attracting Indian companies. Several Hollywood studios such as Sony Pictures Entertainment and Warner Brothers are also collaborating with Indian film producers to make Hindi films.

Sarkar says more and more companies will flock to Bollywood in the future.

"There is big money, big returns and there is an element of glamour alongside ... so a lot of people are getting into films," she said.

For Bollywood film producers, the benefits have been huge. They once made films on shoestring budgets - less than $4 million compared to over $70 million for a Hollywood film.

But movie budgets have skyrocketed as large sums of money roll into the film industry, allowing producers to experiment with new technology and techniques. More money is being spent on slick marketing campaigns.

The mushrooming of multiplex cinemas across the country has increased ticket sales as a booming middle class regularly heads out to watch the latest films.

According to industry estimates, all this will help the Hindi movie industry grow from its present size of about $2 billion to nearly $4 billion by 2011.