Hyderabad, Sep 25 (IANS): The Indian film industry's earnings are expected to reach $3.7 billion by 2020, says a Deloitte Indywood report.

The first ever exclusive report on the Indian film industry was released on Sunday at the Indywood Film Carnival 2016 at Ramoji Film City here.

"In terms of revenue, the industry has gross box office realisations of $2.1 billion, which is expected to grow at 11 per cent CAGR reaching $3.7 billion by 2020," it said.

The Indian film industry is the largest in the world in terms of number of films with 1,500 to 2,000 films produced every year in more than 20 languages.

The report observed that despite the large number of films produced in India, the industry gross realisation has been substantially lower than its global counterparts.

"For example, the box office realisation in the US and Canada stand at $11 billion whereas these countries produce significantly lower number of films (approximately 700 films)."

The report attributed this to challenges like low infrastructure penetration, slow growth in average ticket price (ATP), complicated tax regime, rising costs and lack of access to funding, piracy, multiple layers of bureaucracy and prevailing strict censorship norms.

The domestic box office contributes majority of the revenue, representing 74 per cent of the total industry.

Cable and satellite rights and online/digital aggregation revenues are the fastest growing segments, and expected to grow at a CAGR of about 15 per cent over 2015-2020, said the report.

The Indian film industry is dominated by Bollywood, the Hindi film industry, contributing 43 per cent of the earnings, while the regional films contribute the remaining 57 per cent.

International films currently form a small, but growing segment, driven by rising numbers of English (and other foreign language) speakers, as well as increasing numbers of international movies witnessing dubbed releases across the country.

According to the report, the key growth drivers for the industry are increasing per capita income and growing middle class, demand from Tier-2 and Tier-3 cities, diversifying into international markets, releasing the potential of digitisation, upside from ancillary revenue streams and upcoming use of Visual Effects (VFX) in movies.

"This report is a first of its kind and is aimed at initiating an integration process for the entire film industry in India. The report is a result of extensive research work on the Indian Film Industry and we are optimistic that the entire industry will adopt it as a bible for the Film Business," said Sohan Roy, Director, Indywood Projects.