An era of closer collaboration between Indian and UK film-makers began today as film Minister Barbara Follett launched a historic film co-production on the set of major Bollywood movie London Dreams. Now, any Indian filmmaker who wants to collaborate with a British producer under the treaty will have access to a range of benefits including tax breaks, sources of funding and practical support.

As a direct result of the treaty, it is expected that as many as ten film projects will go into production in the next two years, providing jobs, entertainment and cultural benefits to two of the world's great cinema-going nations. Barbara Follett was in Trafalgar Square today with Bollywood stars Salman Khan, Ajay Devgan and Asin and London Dreams Director Vipul Shah to launch the treaty.

She said: "After the United States, the British and the Indian film industries are arguably the two greatest in the world. The range of benefits we are offering through the treaty aims to bring our industries closer together - and I am confident that Indian filmmakers will want to take up the offer.

"Any Indian filmmaker who wants to collaborate with a British producer will find it more financially worthwhile. We can also offer a mature production infrastructure and share expertise between the two countries' film industries. I am delighted to see some of the biggest names in Bollywood filming in the heart of London and hope to see many similar co-productions being filmed around the UK in the coming years."

Without the treaty UK-Indian co-productions would have to pass the UK cultural test to qualify for tax relief. Most would be unlikely to - particularly if they were in a non-Council of Europe language like Hindi or Tamil.

The treaty allows co-produced films to bypass this test. This means they are granted national status in both countries. And this means they can gain access to the new UK tax relief - one of the most generous and competitive tax reliefs in the world.

Films made under the UK-Indian co-production treaty can also benefit from:

* possible funding from the UK Film Council;
* support to help them sell their films at international festivals; and
* increased access to EU markets and TV sales.

The treaty will also indirectly support a range of businesses. This includes British-Indian suppliers which support filmmakers with anything from costumes to caterers, British-Indian owned cinemas who are likely to show the films and the UK tourist industry.

India is a major centre of both film production and cinema-going and closer collaboration will help UK filmmakers to break into this huge developing market, increasing audiences for British films and encouraging the creation of more Anglo-Indian films.

The treaty with India will be the 7th of the UK's bi-lateral co-production treaties; additionally the UK is signatory to the European Convention. Over 400 co-production films have been made over the last 7 years, including over 140 minority UK co-productions, with an average UK expenditure of 35% which is worth over £1 billion to the economy.

There is already huge interest in Indian films in the UK - and it is growing. Record numbers of Bollywood films have been released in the UK over the last few years. There were 2.6 million visits to Hindi films in the UK in 2005, and Indian films accounted for over 16% of all releases, taking £12.4m at the box office. Hindi films have been the most successful of non-English language films for some years now. They are an established feature of the film landscape in the UK with their own exhibition and distribution networks.