Apart from exploiting the potential of Indian film content globally, there are opportunities for the country to emerge as a preferred outsourcing destination for films due to inherent cost advantages, says a study.

With a large number of Hollywood films being shot outside the US, India can utilise its range of locales for film shoots covering nearly every conceivable climate and location, says the entertainment industry study by KPMG and the Confederation of Indian Industry (CII).

It said India was steadily growing into a major hub for cost-effective outsourcing for animation and special effects.

The convergence of computer technology with filmmaking technology is revolutionising the way films are made. Digital content is an integral part in Hollywood films such as "Matrix", "Twister", and "Jurassic Park", the study reported.

"Given the fact that India has a talent pool of software professionals that is available at much lower cost compared to the West, India can be at the forefront of film related software and graphics production."

A beginning has been made by organisations like the Hyderabad-based Ramoji Studios that has provided equipment, crews, sets and post-production facilities to at least seven Hollywood productions, including the Oscar-winning "Gladiator".

According to the report, India is growing into a major hub for cost-effective outsourcing for animation and special effects.

The size of the Indian visual effects industry is currently estimated at around Rs.30 billion ($685 million) and has grown at around 30 percent in the last few years.

The National Association of Software and Service Companies (Nasscom), the country's IT sector umbrella group, says the size of the animation industry itself is Rs.25 billion while special effects and other services account for Rs.5 billion.

The KPMG-CII report, however, pointed out that India currently formed an insignificant part of the global visual effects value chain.

"Over the last couple of years, many new post-production studios have been set up in India, aided by the fact that the infrastructure requirements for a medium size visual effects studio are not very high," it said.

"Most of these establishments operate well below their true capabilities and at a relatively low end of the value chain.

"Also, no Indian studio has yet been able to integrate all the segments to be able to offer large-scale end-to-end services for discerning clients," added the report.

It pointed out that Indian post-production and animation houses should make the necessary investments in technical and human capital to be globally competitive in terms of quality and creativity and not merely on costs alone.

The report said a facilitative regulatory environment and a focussed promotion drive by the government and industry associations could help create the right visibility and awareness for India as a film shooting destination.

A large number of Hollywood films are presently shot outside the US. While "Matrix", for instance, was shot in Australia, "Shanghai Knights" was filmed in the Czech Republic, "Anacondas" in Indonesia, and large parts of "Kill Bill" and "The Entrapment" in Beijing and Malaysia respectively.

"The Indian subcontinent extends right from the snow capped Himalayas in the north to the warm coastal regions in the south, with forests and deserts in between," the report pointed out