CREATIVE OPPORTUNITIES: INDIA'S AVGC SECTOR MOVES UP THE VALUE CHAIN

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Picture Courtesy:  BUSINESS-STANDARD

Context

The Ministry of Information and Broadcasting has identified the Animation, Visual Effects, Gaming, Comics, and Extended Reality (AVGC-XR) sector as a primary driver for India's creative economy, often termed the "Orange Economy."  

What is the 'Orange Economy'?

The Orange Economy includes all economic activities where value is derived from creativity, culture, technology, and Intellectual Property (IP). 

Economic Powerhouse

India’s Media and Entertainment (M&E) sector was valued at ₹2.5 trillion in 2024 and is projected to reach ₹3.06 trillion by 2027, growing at 7% annually. (Source: Economic Survey 2025-26)

Export Diversification

Online gaming generated ₹232 billion in 2024, projected to reach ₹316 billion by 2027, highlighting how creative services can diversify India's export basket beyond traditional goods and services. (Source: PIB)

Alignment with SDGs

The sector directly supports SDG 8 (Decent Work and Economic Growth) and SDG 4 (Quality Education) by creating new, formalized career pathways for youth.

Significance of the AVGC-XR's Role in Socio-Economic Growth Sector

Job Creation and Economic Impact

Massive Employment: The industry supports over 10 million livelihoods and is projected to require 2 million new professionals by 2030. (Source: Economic Survey 2025-26)

High Economic Multiplier: For every direct job created in the AVGC sector, it generates 2 to 3 indirect jobs in related fields like digital marketing and tech infrastructure. (Source: PIB)

Decentralized Growth: The sector is developing tech hubs beyond major metros. Cities like Pune and Indore have emerged as key centers for VFX and animation.

Enhancing India's Soft Power

Rooted in the constitutional guarantee of Article 19(1)(a) (Freedom of Speech and Expression), the AVGC-XR sector is a powerful tool for cultural diplomacy.

Global Cultural Footprint: High-quality visual effects have propelled movies like RRR and Project K to global success, boosting tourism and promoting Indian narratives worldwide.

Gaming as a Cultural Export: The government has strategically shifted its perspective on gaming, now treating it as a legitimate competitive sport and a key cultural export, moving away from past stigma.

Government Initiatives

Union Budget 2026-27: Formally mainstreamed the Orange Economy as a services-led growth engine.

WAVES Summit (World Audio Visual and Entertainment Summit): A global forum held in Mumbai to position India as a media and entertainment hub.

Creative Economy Fund: A proposed $1 billion fund to invest in creative industries like film, animation, and digital content. 

National Centre of Excellence (NCoE): Established in Mumbai (also known as the Indian Institute for Immersive Creators) to provide industry-aligned training and R&D.

Institutional Framework: The Indian Institute of Creative Technologies (IICT), modelled after IITs/IIMs, has partnered with global giants like Google, Netflix, and NVIDIA for curriculum development.

Early Skilling: Plans to set up AVGC Content Creator Labs in 15,000 secondary schools and 500 colleges to nurture talent from a young age.

National AVGC-XR Policy: To establish India as a global hub for extended reality and animation by offering incentives for co-production and IP creation.

Key Challenges Facing the Sector

The "Service Provider" Trap

Historically, Indian studios have performed backend work for foreign companies. While Indian talent provides the labor, the valuable Intellectual Property (IP) and profits remain with foreign studios.

Weak Academic Infrastructure

India lacks a premier national institution for AVGC education, equivalent to the IITs for engineering, to set standards and foster world-class talent.

Lack of Competitive Fiscal Incentives

Compared to countries like the UK and Canada, India has historically offered fewer tax rebates and financial incentives to attract and retain VFX and gaming studios.

Career Stigma

Animation and gaming are often viewed as "hobbies" rather than serious, high-paying career paths, leading to a "brain drain" where top talent leaves for studios in Canada or the US.

Way Forward 

The government-appointed AVGC Promotion Task Force, led by Apurva Chandra, has outlined a clear roadmap. The key recommendations include:

• Launch a National AVGC-XR Mission: Create a mission-mode project with a dedicated budget to ensure integrated, cross-ministerial efforts for promoting the sector.
• Establish a National Centre of Excellence (CoE): Build an apex institution for skilling, research, and innovation in AVGC, complemented by regional centers in partnership with states.
• Create a Dedicated IP Production Fund: Establish a fund to financially support domestic studios in creating and owning original Indian IPs, breaking free from the service-provider model.

Mainstreaming AVGC in Education

Integrating creative arts and digital media into the National Education Policy (NEP) 2020 at the school level to build a foundational talent pool

Digital Infrastructure

Expanding the Green Energy Corridor and high-speed 5G connectivity to Tier-II and Tier-III cities to allow decentralized "remote-work" studios to thrive.

Learn from Global Best Practices

South Korea's Gaming Industry Transformation

South Korea's journey provides a blueprint for turning a stigmatized activity into a massive export engine.

UK's Fiscal Incentive Model

The UK uses targeted tax relief to attract global creative projects. In 2023-24, it provided £2.4 billion in tax relief to its creative industries. Initiatives like the Video Games Expenditure Credits (VGEC) are designed to make the UK a magnet for global studios, a strategy India could adopt.

Conclusion

Transitioning India from an AVGC-XR service provider to an original IP creator through a National Mission and fiscal incentives is essential for leading the global Orange Economy and achieving a technologically sovereign Viksit Bharat @ 2047.

Source: BUSINESS-STANDARD