Development of an

Animation, Visual effects,

Gaming and Comics
(AVGC) Lab
IT&ITeS
Government of Gujarat
Contents

Project Concept 3
Market Potential 5
Gujarat – Competitive Advantage 7
Project Information 8
- Location/ Size
- Infrastructure Availability/ Connectivity
- Raw Material/ Manpower
- Key Players/ Machinery Suppliers
- Potential Collaboration Opportunities
- Key Considerations
Project Financials 11
Approvals & Incentives 12
Key Department Contacts 15

Page 2
Project Concept

Animation, visual effects, gaming and comics – Overview

The AVGC sector is represented by companies, joint ventures, focus groups, consultants and
creative professionals engaged in the business of conception, production, post-production, media
and intellectual property rights management, publishing and marketing of animation, visual effects,
special effects, editing, digital gaming including mobile, console, desktop games (excluding
gambling) and comics content. They also actively promote the products and related services like
development of software used in pre-production, production and postproduction pipelines, education
and advanced research, development of AVGC subjects, related technology and its business
management.

1 Animation

Animation is the technology of displaying frames in succession to create an illusion of motion.

Animation is used in entertainment, education, design, gaming, simulations etc. It is basically
categorized into 2D traditional animation that is done manually by hand and 3D-digital animation that
is done by using various software applications. It is finding its use in mobiles, software applications,
movie visual effects, visual communication and advertising.
Animation Entertainment includes the TV/Broadcast of animated cartoon series through 2D cell
animation (using 2D bitmap or vector graphics), 3D CGI animation or 3D motion capture animation.

2 Visual effects (VFX)

Visual effects or VFX is the grouping of various processes by which imagery can be created without
actually shooting for it live. It can also be used to enhance a live footage to exhibit sequences which
would be impossible or not feasible to shoot live.

3 Gaming

Video Games are software applications that involve interaction with a user interface to generate
visual feedback on a display device. Interactive games are used for entertainment, education
(edutainment) and for non-entertainment applications such as serious games (games that are
designed primarily to convey information or a learning experience of some sort) and simulation.
The electronic systems used to play video games are known as platforms; examples of these are
personal computers, video game consoles such as Playstation, Xbox and Nintendo Wii, handheld
consoles such as Nintendo Gameboy Advance, Playstation Portable (PSP) and mobile devices
such as mobile phones and iPhones. The Internet is also a platform for various forms of web
based games.
Online games are played on the internet through web portals. These games range
from basic single-player games to multiplayer online role-playing games (MMORPG).
Online
MMORPGs enable several players to simultaneously interact during a game on the
Internet.

Page 3
Project Concept

Animation, visual effects, gaming and comics – Overview

These games are played on mobile telephone devices. Mobile games typically cost
Mobile under INR500 and are sometimes adapted from popular console or PC games.

Games in this segment are played on a PC, which is usually upgraded with gadgetry
PC such as an additional graphics card for an enhanced gaming experience.

This segment of gaming requires a separate hardware known as a console that is

loaded with the games software. The main brands in this segment include the Sony
Console Playstation, Nintendo Wii and Microsoft Xbox. Typically, a generation of console lasts
for a few years, also called console cycles and is upgraded/replaced by a new
generation of gaming hardware and software.

4 Comics

The term derives from the mostly humorous early work in the medium, and came to apply to that
form of the medium including those far from comic. The sequential nature of the pictures, and the
predominance of pictures over words, distinguishes comics from picture books. Comics are
combination of cartoon with a story line, laid out in a series of pictorial panels across a page or a
digital media and concerning a continuous character or set of characters, whose thoughts and
dialogues are indicated by means of "balloons" containing written speech. The comic strip form can
be employed to convey a variety of messages (e.g., advertisements, education, entertainment, etc.)

Page 4
Market Potential

Potential market size

Animation, Gaming, VFX, Entertainment & Allied industries are the emerging verticals in the ICT
sector. Globally, these verticals have been in focus in the recent past and are expected to form a
significant share in the ICT and Entertainment Industry in the future. The sector has huge potential to
generate employment and surge ICT exports resulting in socio-economic development of the Country.

Animation, VFX and Postproduction

market in India (INR Billion)
India is now seen as a leading
destination for high-end, skill-based
activities. The Indian Animation, VFX 108
and Postproduction industry is
estimated to grow at a CAGR of 16% by
2020. Over the years, the Animation,
Visual Effects, Gaming and Comics
(AVGC) industry has seen the entry of
many global majors who have tapped 51.1
into India's talent pool for offshore
31
delivery of services.

2011 2015 2020

Source: Edelwiess

Key trends
 Developments over the years indicate that India is emerging as a key animation and gaming
development market. The industry is expected to double in size to INR108 billion within five years,
as Hollywood studios tap a large pool of low-cost, English-speaking animators who are familiar
with Western culture.

 While Indian gaming companies have attracted investments from entertainment majors and
private equity players in the past, international gaming companies have also set up base in India
either to capitalize on the low-cost advantage or to serve the emerging local market through
customized content.

 VFX is also picking up in India and gaining strong foothold as more and more Bollywood and
regional productions are employing VFX. In 2015, Baahubali – The Beginning used VFX in almost
90% of its scenes.

 Gaming development in India has also been strengthened by the entry of animation companies
into game development. It is easy for the animation companies to tweak existing resources
(employees with skills in animation development) to gain from a new opportunity.

Page 5
Growth Drivers

Growth drivers

1 Growing demand of AVGC services

 There is an increasing demand for AVGC services in India across a range of sectors due to:
 Surge in 3D/HD animated movies in theatres and use of animation and VFX in TV,
advertising and gaming
 Growing outsourcing of VFX and gaming to India due to cost effectiveness of Indian
players
 Growing focus on the ‘kids genre’ and rise in dedicated Kids TV channels.
 Increasing share of animation driven advertisements
 Improving internet bandwidth and smartphone penetration which is driving uptake of
online/mobile gaming and leading to further boost in development of video games.

2 Increasing government support for AVGC

 The Central Government has allowed 100% FDI in the sector through automatic route
provided it is in compliance with Reserve Bank of India guidelines.
 It has also carved out a National Film Policy to tap the potential of the film sector mainly for
the animation segment and has agreed to set up the National Centre of Excellence for
Animation, Gaming, Visual Effects and Comics industry in Mumbai.
 A number of State Governments have also recognised the strategic importance of investing
in this sector given its employment generation potential in the coming years.
 The Karnataka Government has formed Karnataka AVGC Policy, which includes
setting up a Centre of Excellence for promoting AVGC education in the State and
setting up Digital Art Centres to implement digital art and animation curriculum in
select Fine Art schools across Karnataka.
 The Maharashtra Government has also come up with a number of provisions in its
IT/ITeS policy to promote the AVGC sector including attracting global companies,
focussing on legal framework for intellectual property creation and protection. The
state government also intends to set up two AVGC parks in Lonavala and Pune.
 The Telangana Government is also actively promoting the AVGC sector and is
planning to setup an incubation centre IMAGE (Innovation in Multimedia, Animation,
Gaming and Entertainment) in Hyderabad.

Page 6
Gujarat - Competitive
Advantage
Ease of doing Established Flourishing
business/ Policy
support infrastructure economy

 Gujarat is ranked first in
ease of doing business
as per DIPP report
2015.
 Only state with 100%
compliance with
environmental
procedures.
 Gujarat ranked No.1 in
e-transactions for
government services
 Gujarat was ranked No.
1 in terms of setting up
a business, allotment of
land and obtaining a
construction permit.
 Encouraging Start up
and Electronics policy
of State.
 Located on the west coast
of India, Gujarat is well
connected to the major
cities of the India and to the
rest of the world by air and
sea routes.
 The state has 40 ports, 13
domestic airports and 1
international airport in
addition to an extensive rail
and road network.
 Gujarat is the one of the
power surplus states in the
country. This helps it in
attracting huge amount of
investment from the
industries and tagged as
preferred investment
destination in the country.
 Gujarat contributes 7.2%
of the Nation GDP and
shows leadership in
many areas of
manufacturing and
infrastructure sectors.
Gujarat’s GSDP (Gross
State Domestic Product)
at current prices
registered a growth of
11% during the year
2014-15.
 Gujarat has attracted
cumulative FDI worth
US$12 billion from April
2000 to March 2015.
 Gujarat contributes
around 19.1% to India’s
total exports of goods in
2014-15.

High availability of skilled manpower (engineers)

Engineering seats in Gujarat – by
specialisation (2016-17)  In 2016-17, Gujarat had ~134
Others 2,718 engineering degree colleges with an
intake of ~68,000 students per year.
Auto 2,202
Leading engineering colleges in Gujarat:
Chem 2,220  Indian Institute of Technology (IIT),
IT 4,857 Gandhinagar
Electronics 5,607  Sardar Vallabhbhai National Institute of
Technology, Surat
Electrical 9,611
 Gujarat Technological University,
Computer 10,224 Ahmedabad
Civil 12,114  Nirma University - Institute of Technology,
Mech 18,028 Ahmedabad
Total seats: 67581
Source: Gujarat Technical University
The state prides itself in quality work force and peaceful work force accounting for only
0.5% of man days lost while having contributed 16% of India’s industrial production.

Page 7
Electronics and IT SEZ
in Gujarat
IT/ITeS and electronics regions
 Gujarat Government enacted the Special investment regions (SIR) act in 2009 with the objective
of creating large size investment regions in the state and develop them as global hubs of
economic activity supported by world class infrastructure.
 The state has three SIRs for electronics manufacturing.

 SEZ are special duty free enclaves for the purpose of trade. These zones are self-contained and
integrated, having their own infrastructure and support services. Apart from state-of-the-art
infrastructure and access to a large skilled work force, the SEZ also provides enterprises with
attractive incentives.
 The state has one electronics SEZ at Gandhinagar and 14 IT/ITeS SEZs - six at Ahmedabad,
four at Gandhinagar, three at Vadodara and one at Valsad.

Ahmedabad

Gandhinagar

Viramgam
Halol-Savli
Vadodara
Tourist Navlakhi
Electronics SIR flow*
IT/ITeS SEZ
Electronics and IT/ITeS SEZ Valsad

Promotion of IT/ITeS and electronics industries

 Gujarat Government introduced a new IT policy to provide a proactive and industry-friendly
climate for the IT industry. Incentives and assistance would be provided in allotment of land,
development of IT/ITeS parks, stamp duty concession, electricity duty exemption and capital
assistance on lease rentals.
 The policy also intends to establish the state as a preferred IT destination for micro, small and
medium enterprises (MSMEs) by providing assistance on quality certification, technology
acquisition fund, skill enhancement, patent assistance, simplification of labour laws, subsidy
on bandwidth for connectivity and exemption from zoning regulations.
 Gujarat Government introduced new Electronics policy with the aim of establishing a self-reliant
ESDM industry that caters to needs of domestic and international market. The policy includes
development of human resources, creation of local demand for electronics products, creation of
eco-system for innovation and R&D, and incentives such as VAT/CST subsidy, single window
clearance, uninterrupted power supply, registration and stamp duty concession and interest
subsidy.
 Gujarat Government, recognising the need for additional support for Electronics & IT/ITeS start-
ups and keeping this at the centre of its strategy as recognized by the Government of India,
through ‘Start-up India initiatives and to supplement efforts in that direction has decided to come
up with a focused policy for Start-ups in Electronics & IT/ITeS sector.
Page 8
Project Information

Development of AVGC facility in Gujarat

 The Government of Gujarat is seeking investments to develop an

Animation, Visual Effects, Gaming and Comics (AVGC) Lab in
Gujarat.
Project brief  The proposed AVGC Lab is envisaged to be a state of the art
facility that will provide the industry in Gujarat a holistic
technological boost in all aspects of the AVGC sector.

Project size  Employs around 100 – 150 employees.

 The target market for AVGC facilities include the domestic and
foreign film and gaming market.
Target market
 In addition, the animation films and games can also be released
directly across different media platforms.

Potential destinations

Gandhinagar

Ahmedabad

 Gandhinagar and Ahmedabad

have ten special economic
zones and dedicated IT / ITeS
Parks
 Gandhinagar is considered as
an emerging ‘Knowledge Hub’
Tourist
with the establishment of flow*
various educational institutes
such as IIT and IIMs as well as
National Institute of Design,
Gandhinagar

Page 9
Project Information

Infrastructure availability
Logistics & connectivity
Rail
Ahmedabad Gandhinagar

 Ahmedabad is one of the most important  Gandhinagar is well connected to the

railway stations in the state. metropolitans of western India. Many trains
 As of July 2015, an investment of US$16.58 with Mumbai as their destination pass
billion for the construction of bullet train through Gandhinagar, which facilitates an
between Mumbai and Ahmedabad has easy flow of tourists from all over the
been allocated. Construction of this project western India.
is expected to start by 2017.
 In Budget 2015-16, the Government of Gujarat announced plans to invest US$ 101.36 million
for the construction of the initial phase of Ahmedabad Metro Rail Project. Metro Link Express
for Gandhinagar and Ahmedabad plans to connect the two cities in the shortest possible time.

Air

 Sardar Vallabhbhai Patel International Airport located in Ahmedabad serves the metropolitan
areas of two cities in the state of Gujarat - Ahmedabad and Gandhinagar. It provides
domestic flights connectivity to the metros and other major cities of India. It also offers
international flight connectivity to major countries across the world.

Road

 Ahmedabad is well connected to cities  Gandhinagar is connected to Surat,

across states. As of October 2015, in
Ahmedabad, 88 km of BRTS Corridor was
planned. As of November, 2015, corridor
length of 45 km is operational and supports
a daily ridership of 125,000 people.
Mumbai, and Navi Mumbai through
National Highway 8A. It is connected to
Ahmedabad, Jaipur, Udaipur, New Delhi
and Chandigarh via National Highway 8C.

Utilities
Power
Water

 Gujarat has successfully interlinked 27  The state is self-sufficient in power with

rivers across the State and has in place a its present generating capacity of
state-wide water grid across 120,000 km 23,973 MW (including about 4,385 MW
enhancing the quality of life and growth of renewable energy),
prospects of the state

Page 10
Project Information

Animation value chain

Concept Pre Production Post

Distribution
Creation Production Production

 IP Creation  IP  Modelling  Lighting  Promotion

development
 Script  Character  Texturing  Distribution
preparation  Funding rigging
 Sound effects  Video release
 Character  Scheduling  Voice  Music  DVD release
design recording
 Integration of  Content  Cinema
 Story process  Layout repurposing screening
Conceptualizat equipment animation
ion providers  Digital  TV screening
 Screenplay management
 Storyboarding
 Visual
development

Estimated manpower requirement

Manpower requirement (100-150)
Manager Administrative & Skilled worker
sales staff

15 15 70-120
Persons Persons Persons

Leading players in India

Assemblage Entertainment Prime Focus

Future Thought Productions Prana Studios

Green Gold Animation Reliance MediaWorks Ltd

Lumicel Animation Studios Tata Elxsi

Makuta Animation Toonz India Ltd

Pentamedia Graphics Trace VFX

Red Chillies Entertainment

Page 11
Project Information

Potential collaboration opportunities

Association of Bangalore Animation Industry (ABAI)

NASSCOM

Maya Academy of Advance Cinematics

Zee Institute of Creative Art, Surat

Frameboxx Animation and Visual Effects

Image Institute of Digital Technology, Vadodara

Key business models

Angel Networking

Syndicates

Fund

Public Private Partnership

Compensation Structure – shared risks

Page 12
Project Financials

Project cost

The total project cost of setting up a typical AVGC facility will be ~INR260 million.

Key cost components (Indicative) INR million

Building and Land 50
Furniture and fixtures 30
Computers and Equipment 150
Contingencies (transport, insurance, telephone charges, repair and 25
maintenance)
Preliminary and preoperative costs 5
Total cost 260

The estimated project cost has been calculated based on the capital requirement/investment of a
typical AVGC facility. However, it may vary by individual project.

Recently, Centres of Excellence (CoE) in Gujarat have been built via PPP model, with MoUs being
signed between the government of Gujarat and industry partners.
A similar model is proposed for the AVGC training center.

Key cost components (Indicative) INR million

Building and civil works (training institute) 25
Equipment 21
Furniture and fixtures 4
Preliminary & pre-operative expenses 9
Provision for contingencies 3
Total cost 62

Note: 1) Land rate based on Gandhinagar IT SEZ (rate may vary depending on the location of the site).

Page 13
Approvals & Incentives

Approvals required

• For approvals, the project report should be submitted to respective District Industries Centres
(DICs). DIC will forward the proposal to Industries Commissioner who will submit the report to
State Level Approver Committee (SLAC) for final approval.

Incentives from Government of Gujarat

Government of Gujarat introduced IT/ ITES Policy for the state of Gujrat (2016-2021) in order to
establish Gujarat as a preferred destination for Global Knowledge Workforce and IT/ITES
Industry with a turnover of US$15 billion by 2021 to create employment opportunities for 1 million
people by 2021. The policy also covers Animation sector and envisages to promote Animation, 3D
Gaming etc.
In addition to the assistance available under any of the schemes of the Government of India,
eligible IT/ITES units will be entitled to the following assistance from Government of Gujarat:

Incentives to the IT/ ITeS Park

Capital assistance
Eligible area Admissible Maximum limit
assistance (INR million)
Horizontal IT/ITeS Parks 25% of fixed 250
capital investment
in buildings and
infrastructure
Vertical IT/ITeS Parks INR 300 / sq. feet 250
for built-up area

Stamp duty and registration fee reimbursement

• Developers of IT/ITeS Park will be entitled to 100% reimbursement of the stamp duty as well as
registration fee paid by them to the Government of Gujarat, towards lease/sale/transfer of land
for the IT/ITeS Park.

Power tariff subsidy to IT/ITeS Parks

• Power tariff subsidy will be given at INR1 per unit in the billed amount for a period of five years
as promotional incentive on reimbursement basis. The subsidy will be applicable only when
electricity will be purchased from the state electricity / power distribution licensee.
• IT/ITeS Park will be given 100% reimbursement for electricity duty paid for a period of 5 years
from the date of approval of IT/ITeS Park.

Page 14
Approvals & Incentives

Incentives to the IT/ITeS Units

Capital subsidy
Eligible IT/ITeS units will be entitled to capital subsidy @ 25% of capital expenditure for one time
purchase of computers, networking and related hardware, subject to a ceiling of INR10 million.

Lease rental subsidy for five years to the eligible IT/ITeS units
Scale Admissible Maximum limit
subsidy
Up to 20 employees INR 8 / sq. feet Lease rental subsidy
shall not be more
Above 20 but less than 100 employees INR 5 / sq. feet
than the actual lease
Above 100 employees INR 3 / sq. feet rental

Interest subsidy for a maximum period of five years to the eligible IT/ITeS units
Borrowings Admissible Maximum
subsidy per annum limit per
annum
(INR million)
Up to INR100 million 7% 10
Above INR100 million but up to INR10 INR10 million + 2% of borrowings in 50
billion excess of INR100 million
Above INR10 billion INR50 million + 1% of borrowings in 100
excess of INR10 billion

Reimbursement of stamp duty and registration fee

• Eligible IT/ITeS units will be entitled for reimbursement of 100% of stamp duty and registration
fee paid to the Government of Gujarat for lease/sale/transfer of land for the first transaction.

VAT/CST incentives: (subject to change after the introduction of GST)

• The eligible IT/ITeS units will be provided reimbursement of net tax paid under Section-13 of
Gujarat Value Added Tax Act and 100% of Central Sales Tax (CST) for domestic sales outside
Gujarat, limited to a ceiling of 90% of the GFCI made by the unit, for a period of 10 years.

Other exemptions
• Eligible IT/ITeS units will be given power tariff subsidy at the rate of INR1 per unit in the billed
amount and 100% reimbursement for electricity duty, for a period of five years.
• Eligible units will be given the benefit of reimbursement of the EPF contribution made for their
employees for a period of five years subject to overall ceiling of INR10 million per annum.
• Patent Assistance at the rate of 50%, subject to a ceiling of INR0.2 million per patent for
domestic patents and INR0.5 million per patent for international patents, for meeting the
expenditure for obtaining patents.
Page 15
Approvals & Incentives

Government of Gujarat, acknowledging the need for additional support and nurturing for
Electronics and IT/ITeS start-ups decided to come up with a focused policy for Start-ups in
Electronics and IT/ITeS sector. The policy focuses on facilitating at least 2,000 start-ups,
establishing at least 50 incubators in Gujarat, developing 1 million sq. feet of incubation space
and facilitating investment of US$1 billion for start-ups.

Incentives to the start-ups

Stamp duty and registration fee reimbursement

• Eligible start-ups will be entitled to 100% reimbursement of Stamp Duty and Registration Fee
paid on sale/lease/transfer of land and Office Space for the first transaction.

Interest subsidy
• Eligible start-ups will be provided interest subsidy at the rate of 9% per annum subject to a
ceiling of INR0.2 million per year. Such interest subsidy shall be eligible for a maximum duration
of two years.

Patent assistance
• Eligible start-ups will be provided assistance at the rate of 75% of cost of obtaining patent
subject to ceiling of INR0.2 million per patent for domestic patent and INR0.5 million per patent
for international patent.
• Total quantum of assistance for obtaining such patents shall be limited to INR0.1 million for
international and INR0.4 million for domestic patents per start-up.

Other subsidies
• Eligible start-ups will be provided bandwidth subsidy at the rate of 70% of annual bandwidth
charges subject to a ceiling of INR0.2 million for 2 years.
• Eligible start-ups will be provided skill certification grant at the rate of INR5,000 per skill
certification per person subject to overall ceiling of INR0.1 million per annum per start-up for two
years.
• A onetime assistance of INR0.1 million will be provided to eligible start-ups for prototype/product
development and additional assistance of INR0.1 million will be provided for marketing.
• Eligible start-ups taking space on lease for their operations will be provided lease rental subsidy,
at the scale of 50 sq. feet per employee, for two years on reimbursement basis at the rate of
INR15 per sq. feet per month.

Page 16
 Department of Science & Technology, Government of Gujarat
http://www.dst.gujarat.gov.in

Gujarat Informatics Ltd.

http://www.gujaratinformatics.com
Gujarat Electronics and Software Industries Association

http://www.gesia.org/
Gujarat Industrial Development Corporation
www.gidc.gov.in

Office of Industries Commissioner

www.ic.gujarat.gov.in

Industrial Extension Bureau

www.indextb.com

This project profile is based on preliminary study to facilitate prospective entrepreneurs to assess a prima facie scope.
It is, however, advisable to get a detailed feasibility study prepared before taking a final investment decision.

Department of Science and Technology

Block No.7, 5th Floor,
New Sachivalaya, Gandhinagar
Phone / Fax : 079-23259999
Email: secdst@gujarat.gov.in
https://dst.gujarat.gov.in/index.htm