Describing Bollywood as the most spectacular film industry in the world, Britain Wednesday sealed a pact with India to share expertise in filmmaking and co-producing films.

India's Culture Minister S. Jaipal Reddy met his British counterpart Tessa Jowell to discuss a co-production treaty that would enable filmmakers in the two countries to pool resources in making films.

In a statement of intent, the ministers committed themselves to start negotiations to frame a bilateral agreement on film co-production for mutual benefit and to encourage co-productions.

"In today's film industry, it is increasingly hard to go it alone. Co-production is how much of business is done today," said Jowell after her meeting with Reddy.

"Bollywood is the most impressive and spectacular film industry in the world. Like the UK film industry, it has a rich heritage of producing, entertaining, challenging and culturally relevant cinema."

According to Jowell, the co-production treaty would encourage Indian filmmakers to invest in British talent and locations. In return, they would be eligible for claims to Britain's film tax incentives.

Jowell said a treaty would enable the two countries to continue to compete on the world stage, drawing on their wealth of talent.

The Indian film industry, the world's second largest after Hollywood, is worth $1.3 billion. This is expected to rise to $3.1 billion by the year 2007.

According to British officials, the country is negotiating new co-production pacts with India, China, Morocco, Jamaica and South Africa.