After reading the order of the Competition Commission of India (CCI) wherein it has invited comments from public on PVR Inox’s proposal to discontinue VPF and instead levy a new fee, trade person Suniel Wadhwa has made the following observations:
VPF SUNSET — BUT DOES THE FINANCIAL BURDEN REALLY DISAPPEAR?
PVR Inox’s commitment proposal, published by the Competition Commission of India for stakeholder comments, is being projected as the sunset of the Virtual Print Fee.
However, the proposal seeks to replace VPF with one of the two — an Exhibition Service Charge (ESC) and a Revised Revenue Share (RRS) arrangement.
The alternatives have been proposed by PVR Inox. They have not yet been accepted or approved by the CCI.
What has the CCI decided?
On September 30, 2025, the CCI formed a prima facie opinion that PVR Inox’s continued levy of Virtual Print Fee (VPF) required investigation under section 4 of the Competition Act.
The CCI’s concerns included:
* Allegedly discriminatory treatment because certain Hollywood and Hindi film producers were not required to pay VPF while others continued to pay it;
* The upfront VPF potentially restricting market access for small and medium-sized producers; and
* The allegation that VPF was not attributable to any specific service provided by PVR Inox.
PVR Inox subsequently submitted a commitment proposal under section 48B of the Competition Act. The CCI has published its non-confidential summary and invited public comments, objections and suggestions.
What has PVR Inox proposed?
PVR Inox has proposed discontinuing VPF — and any other upfront payment — from all film producers, irrespective of language, within 120 days from the date on which the CCI accepts the commitments.
Producers/distributors would then be offered two options.
Option 1: Exhibition Service Charge
For standard-format screens:
* Rs. 450 per show until the film completes a total of 60 shows per theatre;
* Rs. 250 per show thereafter.
For premium-format screens, including IMAX, 4DX, ScreenX and Luxe:
* Rs. 600 per show until the film completes a total of 60 shows per theatre;
* Rs. 350 per show thereafter.
The 60-show threshold will be calculated per theatre across the film’s entire run. Standard and premium-format shows will be aggregated to determine when the threshold has been achieved.
Therefore, if all the first 60 shows at a theatre are on standard screens:
60 shows × Rs. 450 = Rs. 27,000 ESC
If all 60 shows are on premium screens:
60 shows × Rs. 600 = Rs. 36,000 ESC
If the 60 shows include both, standard and premium formats, the ESC will depend upon the actual mix of shows.
Importantly, ESC does not end after 60 shows. Only the applicable per-show rate is reduced.
The ESC would be deducted weekly from the distributor’s/producer’s share of net box-office collections.
Impact at a 50% first-week distributor’s share:
Assuming the agreed distributor’s share for the first week is 50%, and all 60 shows are on a standard screen:
* ESC payable: Rs. 27,000
* Net box-office collections (NBOC) required for the distributor’s 50% share to fully absorb the ESC: Rs. 54,000
* Distributor’s share from Rs. 54,000 NBOC: Rs. 27,000
* Less ESC: Rs. 27,000
* Net amount payable to distributor: Nil
If the film generates Rs. 60,000 NBOC:
* Distributor’s share at 50%: Rs. 30,000
* Less ESC: Rs. 27,000
* Net payable to distributor: Rs. 3,000
If the film generates only Rs. 40,000 NBOC:
* Distributor’s share at 50%: Rs. 20,000
* ESC calculated for 60 standard shows: Rs. 27,000
* Shortfall: Rs. 7,000
The published commitment summary does not clearly state how this shortfall would be treated.
Would it be waived, carried forward to the following week, separately invoiced, adjusted against another cinema or film, or treated as an outstanding liability?
What happens when a film gets only one show?
Because ESC is proposed as a per-show charge, a film played for only one show should attract:
* Rs. 450 on a standard screen; or
* Rs. 600 on a premium screen.
For one standard-screen show, assuming a 50% distributor’s share:
* ESC: Rs. 450
* NBOC required for the distributor’s share to absorb the ESC: Rs. 900
If the show generates only Rs. 500 NBOC:
* Distributor’s share at 50%: Rs. 250
* ESC: Rs. 450
* Shortfall: Rs. 200
Once again, the proposal does not clearly explain what happens to the unrecovered Rs. 200.
This question is particularly important for small, regional, independent and limited-release films that may get only one or two shows and generate modest collections.
Option 2: Revised Revenue Share
Producers who do not wish to pay a fixed ESC may opt for a revised revenue-sharing arrangement.
Under this option, the distributor’s/producer’s existing share of NBOC may be reduced by no more than 7.5 percentage points.
The commitment summary itself provides the following example:
Existing share: 50%
Maximum reduction: 7.5%
Revised share: 42.5%
Therefore, if the maximum reduction is applied, it must be calculated as:
50% – 7.5% = 42.5%
It should not be calculated as 7.5% of the existing 50% share.
For example, on Rs. 1,00,000 NBOC:
* Normal distributor’s share at 50%: Rs. 50,000
* Revised distributor’s share at 42.5%: Rs. 42,500
* Additional amount retained by the exhibitor: Rs. 7,500
The RRS option may avoid a fixed monetary shortfall because the deduction is linked to actual collections. However, it allows the exhibitor to retain up to an additional 7.5 percentage points of NBOC.
The effect should also be examined across subsequent weeks when the distributor’s normal contractual share itself declines.
“No upfront payment” does not mean “no financial burden”.
The proposal removes the requirement for payment before release. That may provide some immediate cash-flow relief.
However, it does not necessarily eliminate the economic burden on the producer/distributor. It changes:
* The name of the charge;
* The timing of its recovery; and
* The method by which it is collected.
If an unrecovered ESC shortfall can be carried forward, invoiced separately or adjusted elsewhere, the financial liability has merely been postponed.
Clarifications required before the proposal is accepted:-
The proposed framework should expressly clarify:
* Whether ESC is payable only for shows actually played;
* Whether it is calculated separately at every theatre;
* What happens when a scheduled show is cancelled;
* What happens when a show records zero or negligible collections;
* Whether ESC can consume the distributor’s entire weekly share;
* Whether a negative distributor settlement can arise;
* Whether any shortfall can be carried forward;
* Whether a shortfall can be separately invoiced;
* Whether it can be cross-adjusted against another theatre, week or film;
* Whether GST or any other tax will be charged over and above ESC;
* How ESC will be calculated when the first 60 shows include both, standard and premium formats; and
* How the maximum 7.5-percentage-point RRS reduction will operate in subsequent weeks when the contractual distributor’s share declines.
The framework should expressly provide that ESC cannot exceed the actual distributor’s/producer’s share generated by that film at that particular theatre.
Any unrecovered amount should not be carried forward, separately invoiced, cross-adjusted against another film or converted into a negative settlement.
Otherwise, VPF may disappear from the vocabulary, but its economic burden will remain very much alive.
The name has changed. The timing has changed. The recovery mechanism has changed. But ultimately, it is still the producer/distributor who pays.
VPF may be taking its sunset bow, but ESC is already waiting for its sunrise.
This presently remains a commitment proposal submitted by PVR INOX — not a final arrangement approved by the CCI. Stakeholders may submit their comments, objections and suggestions until October 1, 2026.