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India's animation industry is seeing an unprecedented boom time, but the sector is also facing several challenges these days.
Being in its nascent stage, the animation industry in India has not been very stable. However, it is stepping into the next era of development. Though countries like South Korea and China were far ahead of India in this space, India had the potential to be recognized as an animation hub, if certain factors like education facilities; funds, infrastructure and constant development of original content were stressed upon. It was also important to develop original content that appealed to audiences in America, UK, and Europe, he said.

International exposure limited to the business of non-creative executives and lack of financial backing from the government were the major deterrents to India being recognized as an animation hub. India is a long way from being an animation hub despite having encouraging factors like an English speaking talent pool, and low production costs. India can be recognized as a key player in animation if you look at the industry as a serious business and invest heavily in developing this space.
The content developed by Indian studios should have universal appeal. The Indian outsourcing industry should be considered an advantage only to train people in the basics of animation, but not as the final word in gauging the industry's growth. The best way to ensure wholesome training was to invite global animation experts to train people in Indian production houses that provide animated content.

Early players in Indian animation did not stress on training and investment, and this had stunted the industry's growth. However, India had an advantage over global players in that as there was not much by way of government regulations, and this kept the industry free of several complexities.
India definitely has some advantages and potential to develop the animation industry. Training, investing heavily in the industry, and providing original and compelling content, will be critical to its growth. The encouraging news is that while the primary work coming to India is through animation outsourcing, the industry is moving up to the next level, with some co-production assignments also trickling in – slowly, but surely.

India's animation sector is witnessing a major boom. Overseas entertainment giants like Walt Disney, Imax and Sony are increasingly outsourcing cartoon characters and special effects to India.
In the last few years, India has emerged as a global powerhouse in technology development. But experts say that unlike animators in countries like China, South Korea or the Philippines, Indian animators have not been exposed to animation films.
There is also image that Indian studios have a hard time in delivering quality and schedules effectively.
There is lack of awareness about the industry and absence of substantial venture capital inflow. There is also need for a proper animation training in the country.

Another major problem is lack of government support and financing.
The Central government and every state government in the country have come out with liberal policies aimed at helping software companies. But no such governmental policy or programme exists for animation companies.
Lack of access to venture capital funding, deft or equity financing for animation firms are preventing the industry from gaining stakes in co-production or bringing more work into the country.
India also does not have any international co-production agreements. The animation industry has been lobbying for this and, to enhance the industry's global profile, a group of Indian animation houses have banded together to form the Animation Production Association of India.
The National Association of Software and Services Companies (Nasscom), which conducted an elaborate study on the animation industry in the country last year, came out with a series of recommendations to position the Indian animation studios to global excellence.

Some of these recommendations are:
-Set up animation parks on the lines of the software technology parks.
-Increase the level of interest of audiences in the domestic market in animation.
-Enter into co-production tie-ups with countries such as Canada to develop animation content, and arrangements with producers/studios in the US.
-Increase the range of applications for animation such as documentaries, etc.
-Develop a national brand identification in animation.
- Strengthen the interface between local studios and producers.
-Have a representation in major international animation markets and festivals.
Create assured off take of locally produced original animation productions by domestic broadcasters.
Provide relevant funding and infrastructure for animation product development.
-Take a series of strategic initiatives to build a body of manpower talent to fuel the growth of this market.
-India has a vast base of English speaking workforce: Animation, which requires familiarity with the English language, benefits when the work is outsourced to India. A number of animation companies in the country are also creating skilled manpower for the animation market through various training programmes.
-Presence of good studios: India has the second largest entertainment industry in the world, after Hollywood. Animation studios in the country provide a large supply of low-cost, high-quality software engineers. A number of Indian animation companies have set up hi-tech studios (equipped with state-of-the-art hardware and software) to execute overseas projects.
-Low cost of animation services: The main reason why foreign entertainment firms are flocking to India is the cost advantage the country offers. For instance, in the US, animators can cost about $125 an hour; in India, they cost $25 an hour.

The total cost for making a full-length animated film in America is estimated to be $100 million to $175 million. In India, it can be made for $15 million to $25 million.

C K Prahlad, an animation consultant based in Bangalore, says the biggest advantage is the cost factor. "Indian animation companies are charging extremely low rates compared to other countries. That is attracting the Hollywood companies to outsource their animation film series to the country," he said. Major US animation studios and producers are realizing this huge cost advantage that India offers.

"Due to changing viewing habits, channels or networks are being forced to bring down licence fees. As a result, the volume of work has been dropping.
In this situation, India's advantage of low production costs could be a boon to the domestic animation industry," said Margaret Dean, Sony Pictures' head of family entertainment group and a consultant to various animation studios in the US, during a recent India visit.

According to the National Association of Software and Services Companies (Nasscom), the total revenues of the animation production services sector in India were estimated by between $200 million and $300 million in 2004. Nasscom estimates the animation sector grew at a rate of over 20 per cent last year. "Demand for animation production services from India is growing with the emergence of an organised animation production sector, with state-of -the-art of work required for international TV program production, at substantially lower costs," a Nasscom report said.

Last year, a Nasscom study on the animation industry showed that the global animation production market is set for major growth. The study, which is based on multiple statistical projections on the market, from segments such as industry sources, Pixel Inc and Arthur Andersen (Study on the Entertainment and Media sector) forecast that the global animation market would generate revenues worth $50-70 billion this year. But which are the countries that India is competing with in getting animation outsourcing?
"Primarily, we are competing with China. But even here, our quality standards are much higher than Chinese studios," argues Jayakumar.