As AI reshapes the production pipeline of India’s AVGC sector, the question is not whether the technology will transform the industry but whether the governance architecture will keep pace.
In April 2026, the Ministry of Information and Broadcasting confirmed an INR 250 crore allocation under the Union Budget 2026–27 to establish AVGC Content Creator Labs in 15,000 secondary schools and 500 colleges. The Indian Institute of Creative Technologies (IICT) in Mumbai, operational since July 2025, has launched 18 courses through the Train-the-Trainer programme. These mark the state’s most direct intervention yet in building a creative workforce for an industry whose scale demands it. The sector currently employs roughly 2.6 lakh professionals and could generate over 23 lakh direct and indirect jobs by 2032.
The Animation, Visual Effects, Gaming and Comics (AVGC) sector, spanning animation, visual effects, gaming, comics, and extended reality, is among India’s fastest-growing industries. The AVGC Promotion Task Force, constituted in April 2022, projected a requirement of close to two million skilled professionals by 2030. AI has entered the production pipeline not as a prospect but as a present reality, accelerating timelines, reshaping workflows, and compressing content creation costs. The structural gaps that could constrain it are equally real.
The global AVGC-XR[1] market is valued at approximately US$ 800 billion. India’s share, US$ 2.3 billion in 2019, could grow 2.2 times to constitute 1.5 percent of that total. A CII GT report projects Animation and VFX rising from $1.3 billion in 2023 to US$ 2.2 billion by 2026, with online gaming reaching US$ 4.6 billion by the same year. The generative AI animation segment is projected to grow from US$ 61.6 million in 2023 to US$ 931.5 million by 2033, at a CAGR of 47.9 percent. Studios are deploying these tools to automate repetitive tasks such as rigging[2] and in-betweening[3], freeing artists for higher-order creative work.
The credibility of India’s AVGC ambition rests not on the number of Content Creator Labs it establishes but on whether the professionals and studios that emerge from them operate in a governance environment that enables sustainable competition.
When Netflix launched Eyeline Studios in Hyderabad, the fifth location in a global network covering Los Angeles, Vancouver, Seoul, and London, it signalled that global studios regard India not as a low-cost outsourcing base but as a contributor to high-end digital storytelling pipelines. WAVES 2025 reinforced this shift, convening technology leaders from over 100 countries under the “Create in India, Create for the World” initiative, with the Create in India Challenge drawing over one lakh creators across Tier-II and Tier-III cities. The institutional architecture for a creative economy of scale is being built. The governance architecture has yet to catch up.
The credibility of India’s AVGC ambition rests not on the number of Content Creator Labs it establishes but on whether the professionals and studios that emerge from them operate in a governance environment that enables sustainable competition. Three structural gaps risk undermining this outcome.
1. The Infrastructure Gap
High-performance computing, including GPU clusters, low-latency networks, and specialised rendering infrastructure, remains concentrated in metropolitan facilities. By May 2025, the IndiaAI Mission’s national compute capacity had crossed 34,000 GPUs, yet deployment to Tier-II and Tier-III cities, where creative talent is being directed, is not matched by investment in production infrastructure. Though the ‘India AI infrastructure market’ is expanding rapidly, AVGC-XR workflows are compute-intensive in ways that general-purpose infrastructure does not address. Maharashtra’s AVGC-XR Policy 2025 identifies Nagpur, Nashik, and Kolhapur as potential regional clusters. Rising AVGC demand, driven by compute-intensive rendering, simulation, and generative workflows, will require substantially more distributed GPU access than current deployments provide. For these clusters to function as production hubs rather than training outposts, compute access must follow the geography of creative talent, not precede it.
The challenge is less institutional absence than alignment: existing programmes have not kept pace with AI-augmented workflows, leaving a gap between foundational training and industry-current competencies.
2. The Skill Gap
India hosts the world’s largest base of AI learners at 1.3 million, yet a 50-55 percent gap persists between projected demand and qualified supply. In AVGC, the gap is compounded by the sector’s specificity: it needs professionals combining creative and technical competencies, artists who understand machine learning pipelines, engineers who understand narrative form, producers who understand generative workflow economics. India does not lack institutional presence here. The country has over 1,450 animation colleges, including 900-plus private institutes such as Arena Animation, MAAC, and Toonz Academy, alongside public institutions like the National Institute of Design (NID), the Film and Television Institute of India (FTII), and the Satyajit Ray Film and Television Institute. Industry bodies such as FICCI, CII, ABAI, and SAIK have long contributed to capacity building. The challenge is less institutional absence than alignment: existing programmes have not kept pace with AI-augmented workflows, leaving a gap between foundational training and industry-current competencies. The IICT’s 136 students are orders of magnitude below what the two-million-professional target by 2030 requires. Content Creator Labs in 15,000 schools can build foundational literacy, but do not yet constitute a full pipeline from creative exposure to industry-ready talent.
3. The Intellectual Property Gap
India’s Copyright Act 1957 does not address AI-generated works, assign authorship to AI systems, or guide the use of copyrighted material in AI model training. In December 2025, DPIIT published a Working Paper on Generative AI and Copyright proposing a hybrid licensing model, but foundational questions on authorship and ownership remain unresolved. The Delhi High Court admitted ANI Media v. OpenAI (2024), the country’s first significant generative AI copyright case, without providing definitive guidance. For an industry where IP is the primary export commodity, this ambiguity is not merely a legal inconvenience. It is a structural disincentive to original IP creation and a vulnerability in every co-production negotiation with studios in more settled regimes.
The following three recommendations provide a framework:
1. Build a distributed compute infrastructure for AVGC clusters:
Ministry of Electronics and Information Technology (MeitY), with the Ministry of Information and Broadcasting and the IndiaAI Mission, could designate AVGC-XR as a priority sector for distributed compute access. A portion of the shared compute infrastructure being developed by IndiaAI Mission’s infrastructure could be allocated to designated AVGC production nodes and regional clusters identified under state AVGC-XR policies, providing GPU-as-a-service access that lets studios compete on global pipelines without the capital cost of proprietary compute.
2. Modernise existing institutions while scaling the IICT and Content Creator Labs network:
The Indian Institute of Creative Technologies (IICT) and Content Creator Labs offer a promising template for a sector-specific AI talent pipeline. That template must extend to the modernisation of India’s existing public and private AVGC training infrastructure, so that a democratised pipeline emerges across both streams rather than a parallel system operating apart from them. Bringing public and private institutions onto a common standard is essential for scaling the workforce the sector requires. The IICT could develop a modular curriculum sequencing foundational creative skills with AI-augmented production competencies, covering generative design, virtual production workflows, AI-assisted editing, and prompt engineering. The Train-the-Trainer programme, currently at 15 participants, could scale into a national faculty development scheme, with IICT partnering with leading public and private institutions to accredit AI-AVGC instructors across both public and private institutions. Industry partnerships on the WaveX Startup Accelerator model could ensure curriculum development is paced to the sector’s workflow evolution rather than academic cycles.
3. Legislate clarity on AI-generated IP before the ambiguity compounds:
India could operationalise the DPIIT working paper’s central proposal: a single-window system that abstracts the negotiation between copyright holders and AI model trainers, securing fair compensation for creators while granting developers a collective licence to use lawfully accessed material without negotiating with individual rightsholders. Unlike an absolute exemption, this approach is creator-compensating by design, balancing creator autonomy with the imperatives of innovation. India could also institutionalise the paper’s AI Training Data Disclosure requirement, so AVGC studios can track when their work enters training datasets, and build out the centralised royalty collection mechanism it envisages. Asian peers offer reference points: Japan’s Article 30-4 grounds its AI-training exception in “non-enjoyment use”, a human-centric standard rather than a technical carve-out, while Singapore’s Section 244 permits computational data analysis on lawfully accessed works.
India’s AVGC sector is at an inflexion point. The institutional groundwork, encompassing IICT, the AVGC Task Force, WAVES, and the Content Creator Labs initiative, is stronger than at any previous moment. What remains to be built is the governance layer that converts creative capacity into a durable competitive advantage: compute infrastructure that follows creative geography, a talent pipeline calibrated to AI-augmented workflows, and an IP framework that gives Indian studios the confidence to own what they create.
Purushraj Patnaik is a Research Assistant with the Centre for Digital Societies at the Observer Research Foundation.
[1] Extended Reality; a collective term for immersive technologies including Virtual Reality (VR), Augmented Reality (AR), and Mixed Reality (MR).
[2] A technical stage in animation where a character is given a digital bone structure to enable movement.
[3] Often shortened to "tweening," this is the creation of transitional frames to smooth the motion between key poses.
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Purushraj Patnaik is a Research Assistant with the Centre for Digital Societies at Observer Research Foundation (ORF). His research focuses on the governance of emerging ...
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