August is peak holiday season in the UK and it proved a good time to tempt audiences into the cinema to see Kabhi Alvida Naa Kehna (Never Say Goodbye), the biggest Indian movie hit in Britain last year.

A convoluted story of two couples’ marriages, starring Indian cinema’s biggest stars such as Shahrukh Khan and Amitabh Bachchan, Kabhi Alvida Naa Kehna broke opening-week records. In the northern city of Sheffield, Cineworld, which owns 800 screens in the UK, was turning customers away. Andrew Turner, Cineworld’s head of film buying, says: “If we had known we would have played it on two screens.”

The film’s reception is yet another sign of the growing appeal outside their domestic market of Bollywood movies – named after the centre of India’s film industry, Bombay (now Mumbai). Those cinemagoers who flocked to see it in Sheffield await an even bigger attraction. In June an array of
Bollywood stars, along with producers, financiers and other industry heavyweights, will be at the city’s conference arena – a stone’s throw from Cineworld’s screens – for an awards ceremony that is becoming known as the Bollywood Oscars for its glamorous celebration of Indian cinema.

The decision by the International Indian Film Academy (IIFA), which organises the annual awards, to hold the ceremony and associated festivities in northern England illustrates the concerted effort being made to globalise India’s film industry – the world’s biggest.

Each year IIFA has taken its awards to a different location, to the mutual benefit of both hosts and visitors. India gets more exposure for its films, while the host – last year it was Dubai – benefits from visitor spending and promises of investment.

Yorkshire Forward, the UK regional development agency that helped persuade IIFA to come, spent £2.3m to beat New York to become the host. Yorkshire had already made one unsuccessful bid to stage the event.

The UK is a particularly lucrative market for Indian cinema – the biggest in box office terms outside India itself. Mr Turner, who has been putting Bollywood films into UK cinemas for more than a decade, says that a cinema in Feltham, west London, earns more box office receipts for Bollywood films than any other screen in the world.

Indian cinema’s popularity also means it is a growing contributor to Britain’s economy, with an impact adding up to about £200m a year from ticket sales, distribution and spending on filming in the UK.

The Indian film industry is therefore a valued customer for the UK, as is shown by the efforts being made to lure more of it to Britain. This month, Gordon Brown, the UK’s finance minister and prime minister in waiting, stopped in Mumbai to make the case for more investment. Bollywood’s annual spending on filming overseas is estimated at about $125m.

Such expansion is part of the evolution of the Indian film industry, which is taking advantage of the latest financial and technological openings to project itself around the world.

Eros International, a distributor of Bollywood films, has sold its shares in London – taking advantage of the popularity of the Aim market – and is striking joint ventures with the likes of Comcast and RTL to introduce video-on-demand services in the US and Europe.

Adlabs, a film company, has opened offices in Britain and the US within the past year, while Rajshri, another Indian film producer and distributor, has launched an international video-on-demand service via its website, hoping to tap a diaspora of 20m Indians.

Kishore Lulla, chief executive of Eros International, says the international market for Indian films is growing quickly in places as diverse as Germany and Indonesia. “These are the markets we are tapping into,” he says. “And new genres are finding their niche among British and US audiences.”

Many in the industry expect Bollywood’s profile in the UK to be lifted further by a recent controversy involving Shilpa Shetty, an Indian star, who faced alleged racism and bullying while involved in Celebrity Big Brother, a UK television show. Her forthcoming films are expected to attract bigger audiences as a result.

Awards such as IIFA’s “give a boost” to the industry’s profile, Mr Lulla says.

Expectations for this year’s IIFA event illustrate the impact that Indian cinema’s spending is having internationally. Yorkshire Forward anticipates that the four day event will give a £9.5m shot in the arm for tourism. It with spending by some 28,000 visitors. Yorkshire Forward also expects hundreds of days of shooting in the county, adding to the four Indian films that have already used the region as a backdrop over the past two years.

Yorkshire also wants to use the Bollywood awards as a way into other opportunities that are evolving as India’s economy becomes more globalised. Yorkshire’s trade with India already exceeds £300m a year and the region wants to increase this by using a business networking forum, held during the IIFA event, to promote more long-term commercial ties. : “We are looking for sustained business investment post-IIFA. How do we put Yorkshire on the world stage? There are lots of investors in India that we need to introduce to our region.

Neil Jenkinson, head of culture and major events at Yorkshire Forward, says: “Creative industries are a big cluster in India and they are a key part of the new economy we are trying to build in Yorkshire too.”

Globalisation of India’s film industry may also be two-way, as film distributors and cinema owners take a growing interest in India as a growing middle-class market.

Eros’s Mr Lulla says that India has only 13,000 cinema screens for more than 1bn people and points to a report from consultants McKinsey and PwC suggesting demand for another 90,000. He believes is that development of more multiplex cinemas in Indian malls will lift ticket prices and quickly push up receipts per film. From being a $2.1bn industry Mr Lulla thinks Indian cinema “will be a $10bn-$20bn industry in five to 10 years”.

Avtar Panesar, head of international operations for Yash Raj Films, another big Indian studio, says the arrival in India of traditional Hollywood companies is good for everyone. “There is a lot more corporate structure and transparency. There are more organised ways of working and more solid investments,” he says.