India's flourishing entertainment industry has received a setback with the government's decision to put aside the demands of the sector in the second consecutive general budget, said experts Tuesday.

The industry was expecting that the budget for the next fiscal year would slash the import duty and taxation structure to help the sector emerge as a global hub for quality content production.

"There was no mention of the entertainment sector in the budget even when people are saying this could be the next big thing for the country after IT," said Ravi Chopra, managing director of Mumbai-based BR Films.

"As usual, the government has completely forgotten us. This is really very distressing," tells Chopra.

"The entertainment industry is in itself very vibrant and, therefore, it has managed to emerge as a major revenue generator despite little support from the government all these years.

"But now that the situation is likely to become a bit tough in the near future, we were expecting some help from the government in the form of a rationalisation of the entertainment tax and other duties."

Industry representatives say the government should have given some preferential treatment in the annual fiscal package to the entertainment sector that has the potential of earning billions of dollars in foreign exchange.

Finance Minister P. Chidambaram presented the government's annual fiscal package for the fiscal year 2005-06 Monday with a focus on tax reforms, infrastructure building and poverty alleviation.

The industry had pitched for the lowering of customs duties imposed on the import of broadcasting and filming equipment from an average of between 25 percent and 45 percent to minimum possible levels.

The Indian entertainment industry's revenue touched Rs.218 billion ($5 billion) in the last calendar year and is likely to grow by 20 percent over the next few years to touch Rs.595 billion by 2010, says management consultancy firm KPMG.

The film industry revenue is also likely to increase to Rs.143 billion by 2010, up from Rs.59 billion logged in the last calendar year.

Experts say the market for Indian entertainment products, including television software, films, videogames, animation and music is huge in different parts of the globe.

While the budget didn't unveil any sop for the entertainment business, it dealt a negative blow by bringing multiplexes under the service tax net.

The multiplex promoters would now have to pay 10 percent of their earnings as service tax. This will result in a price hike for those who watch movies in multiplexes that dot the urban as well as semi-urban landscape.

This has come as a blow to the promoters of multiplexes who were expecting the budget to unveil income tax concessions for setting up such cinema halls in all cities.

Currently, companies setting up multiplexes in any part of the country are given 50 percent income tax rebate. This rule, however, doesn't apply in the case of four metro cities -- Mumbai, Delhi, Kolkata and Chennai.

"The inclusion of multiplexes in the service tax bracket will definitely hurt growth in the sector. It's still a nascent business and we were expecting some support to help it gain some traction in the domestic market," said Chopra.