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For as long as I can remember, Hollywood has long set the standard for visual storytelling. From 'Doctor Strange’s' city-bending to 'Dune’s' desert expanses, the benchmark for visual effects is set elsewhere.
That's why, whenever a film in India is released like 'Brahmāstra' or 'Kalki 2898 AD', the instinct is to hold it up against Hollywood’s standard.
But the irony is that much of that Hollywood VFX is 'Made in India'.
The Industry We Don’t See
By 2023, India’s VFX segment was worth around ₹5,400 crore (~$648M).
Strip away the glamour, and the model is still simple: ~70% of that revenue comes from outsourced international projects.
In practical terms, Indian studios remain Hollywood’s back office, stitching together scenes that audiences elsewhere assume were created in Los Angeles or London.
That dependence on service work has had consequences.
When Hollywood paused in 2023–24 during the writers’ and actors’ strikes, India’s VFX business contracted: the animation / VFX / post segment fell 9%, VFX specifically by 14%.
For an industry of more than 4,000 studios, it was a reminder of where the leverage sits.
Policy and Infrastructure
Government incentives are designed to rebalance this.
The central scheme now reimburses 40% of production spend (capped at ₹30 crore), with an additional 5% for “Significant Indian Content.”
States are racing too:
Karnataka’s AVGC-XR policy, Telangana’s IMAGE tower, Kerala’s post-production push. Dolby has opened new Atmos and Vision facilities in Hyderabad, while Kochi’s studios are handling mainstream films like '2018' and 'Premalu' with a level of finish once restricted to Mumbai or Chennai.
The message is clear: build clusters, not just one hub.
2025’s Signals
This year has already produced two markers.
Mahavatar Narsimha
An animated mythological film, has crossed ₹200 crore worldwide, the first time an Indian animation title has hit that scale. With no A-list cast, its success points to a genuine appetite for homegrown visual IP. A full “Mahavatar Cinematic Universe” of seven films is now in development.
Ramayana (2026)
Produced by Namit Malhotra, it is being mounted with 86 cameras and VFX technology adapted from 'Interstellar'. It’s a clear attempt to make an Indian epic match the technical scale of global blockbusters it’s usually compared to.
Studios in Transition
Some companies are already experimenting with life beyond service contracts:
DNEG → Launched IXP and 360 units to step in earlier during projects, not just at final delivery.
FutureWorks → Built steady pipelines with Netflix, Prime Video, and Warner (Dune: Prophecy, Fallout), while adding color grading and rentals to its mix.
Assemblage & Anibrain → Tied into global networks through partnerships with Cinesite and Framestore.
NY VFXWAALA → Partnered with Sweden’s 'Goodbye Kansas' to expand beyond Indian films.
Green Gold Animation → Chhota Bheem shows how owning IP can unlock licensing and merchandise revenue beyond project fees.
On the other hand, public filings tell the less romantic story: one listed vendor, 'Digikore Studios', still draws ~75% of revenue from its top five clients.
That concentration explains why studios are searching for models that offer stability and ownership.
Technology Without the Gloss
AI, real-time rendering, and Web3 get overused as buzzwords but their actual role is narrower... still important.
AI is speeding up repetitive tasks like cleanup, roto, and previews, rather than replacing artists.
Virtual production is the more strategic shift: pre-viz and stage management give studios a seat at the creative table earlier, which translates to better pricing and longer contracts.
Web3 ownership models are still speculative, but for animation IP in particular, they hint at new monetisation layers beyond box office.
None of these alone changes the economics; together, they give studios time and room to make creative bets.
A Market in Tension
Forecasts are cautious as they say that India’s VFX market is projected to grow from $1B in 2024 to $1.7B by 2033 (CAGR ~5.7%).
Animation, on the other hand, could rise from $1.9B in 2024 to $24.5B by 2032 (CAGR ~37.7%).
Outsourcing will keep paying the bills, but it’s the local IP experiments that could define whether India becomes a permanent subcontractor or a genuine content owner.
Leeds1888 TL;DR
India’s VFX industry: ₹5,400 crore in 2023, 70% income is from outsourced work.
2024 saw contraction (VFX down 14%) due to Hollywood strikes, which showed the dependency.
Incentives: 40% rebate, state-level AVGC government policies.
Fresh markers: 'Mahavatar Narsimha' (₹200cr+), 'Ramayana' with 'Interstellar' tech and Kochi’s regional rise.
Shift underway: from service to ownership, but client concentration remains high.
Pop Culture Pulse
Netflix India’s September lineup is skewing heavily toward thrillers, signalling how OTTs are still betting on high-repeat, mid-budget genres.
Karan Johar’s 25 years of Dharma are back in conversation, thanks to his archival posts on Instagram, fueling nostalgia marketing.
Anurag Kashyap’s Kennedy finally locked a release window after its Cannes debut, a reminder that Indian independent cinema still travels festivals before home screens.
What to Watch / Read / Hear This Weekend
Watch: Aavesham (Prime Video), Fahadh Faasil’s cult-favorite performance is already being meme’d into pop culture.
Read: The FICCI–EY Media & Entertainment 2025 report, a sober look at where the numbers actually are.
Hear: 'Maidaan' soundtrack, A.R. Rahman’s score is a return to form, already trending on streaming charts.
That’s this week’s dispatch… see you on Tuesday.
Vipul Agrawal | Founder & CEO, Mugafi.
— Leeds1888
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