India, home to the world's most prolific movie industry, has long tried to draw wider audiences, including by recently forging ventures with Hollywood studios looking to offset sluggish box office sales with new markets and cheaper production costs.

Now, the thumping success of ‘Slumdog’ and a global financial crisis, which has pulled the plug on much Wall Street funding for movies, are bringing Hollywood and Bollywood closer together.

Like India's IT industry, Bollywood may now aggressively tout cheaper facilities for animation films and post-production. ‘Slumdog’ also showcased India's prowess in music and sound mixing, with Oscars for A.R. Rahman and Resul Pookutty.

"India is an important domestic market for all foreign studios and also offers opportunities to cut costs," said Rajesh Jain, head of KPMG India's entertainment practice.

"The Oscars will raise the industry's visibility further."

Studios including Sony Pictures, Walt Disney, NBC Universal, Viacom and Warner Brothers have already put more than $1.5 billion in India for stakes in local TV channels and ventures with Bollywood studios.

Their first efforts, including Disney's first Hindi animation flick, failed to set the Indian box-office on fire, but analysts say they will be encouraged by the success of ‘Slumdog’, which became the eighth movie ever to win eight Academy Awards.

"The Oscar wins for 'Slumdog' only bodes well for the Hollywood-Bollywood connection," said Nelson Gayton at the UCLA Entertainment and Media Management Institute in Los Angeles.

"The critical and commercial success of the film speaks to global audiences for films of Indian content, especially if they do so well in the USA to begin with," he said.

It bodes well for Indian films too, he said, which while popular in the sub-continent have rarely met with global success.

CUTTING COSTS

‘Slumdog Millionaire’ was based on a novel by Indian author Vikas Swarup and filmed largely in the squalid slums of Mumbai.

It was directed by Briton Danny Boyle and distributed and marketed by Fox Searchlight, but many of the cast and crew, including co-director, Loveleen Tandan, are Indian.

The movie is seen by many in the industry as showing a way forward for Hollywood and Bollywood studios eyeing new markets.

"The Oscars have provided a huge platform to showcase Indian talent. It's a foot in the door," said Vijay Singh, chief executive of Fox Star Studios in India, which is looking to make Bollywood films with Indian studios and directors.

"We're going to see more Hollywood studios want a link into India, tapping more resources here, and we're also going to see more Indian directors look to appeal to larger audiences."

Before Boyle, filmmakers of Indian origin, including Mira Nair and Deepa Mehta, made films such as ‘Monsoon Wedding’ and ‘Earth’, which were set wholly or partly in India, and produced and marketed by Hollywood studios.

India has touted itself as a low-cost destination for Hollywood filmmakers, much like Canada has done, highlighting its lush locales, hi-tech studios and cheap labour costs.

Yet differential state taxes, an antiquated licence system and reams of red tape have hamstrung its ambitions.

Long dominated by family-owned production and distribution firms, India's film industry has been bogged down by formulaic fare and box-office revenues of less than 10 percent of Hollywood's because of low ticket prices.

Now, the entry of large corporations, institutional finance, a move to a Hollywood-style studio system and the mushrooming of multiplexes are all transforming the industry and drawing more foreign studios eager for a share of the pie.

India's filmed entertainment sector, estimated at about $2.2 billion, is forecast to grow by more than 9 percent every year over the next five years, according to consultancy KPMG.

STEPPING OUT

Initially, Hollywood studios were content with limited releases of their biggest blockbusters in movie-mad India, dubbing some films in regional languages in a market where racy action flicks and lavish song-and-dance spectacles rule.

In recent years, Hollywood studios looking to cut costs began shipping animation and post-production work to India, tapping its reputed software services skills and affordable workforce.

With ‘Slumgdogs’ Oscar wins, studios may ship more high-end animation and visual effects work to India, said KPMG's Jain.

"Studios will also be looking to tap content, directors and other talent from India," he said, pointing to Slumdog’s Freida Pinto who has been signed by American director Woody Allen.

India's UTV Motion Pictures has co-production deals with Disney and Fox Searchlight, while Indian businessman Anil Ambani's Reliance Entertainment has tied up with a handful of production houses including those of Hollywood stars George Clooney, Brad Pitt and Julia Roberts to develop and co-finance films.

Reliance Entertainment, in which billionaire investor George Soros owns a small stake, also sealed a deal last September with Steven Spielberg's DreamWorks SKG for a new $1.2-billion Hollywood film company.

More such deals are in the offing as Hollywood tries to fill the $18 billion hole left by Wall Street, according to Gayton.

"These dollars need to be replaced from some alternative source, perhaps not at the same level ... but it seems to me India and China are well positioned to fill that gap," he said.