FINDING THE FORMULA FOR F1 IN INDIA

[Author – Avirath Pareek, Final year Law Student at Symbiosis Law School, Pune]

INTRODUCTION

To say that the history of India and Formula One has been a bumpy ride for both parties would be a massive understatement. Since the late 90s, India has had an association with the most popular motorsport in some way or the other.  From its humble beginnings with the Federation of Motorsports Club of India (FMSCI) bearing the broadcast expenses for the live coverage of the races on Doordarshan to the now defunct Buddh International Circuit which hosted 3 Grand Prixs in the last decade, the sport hasn’t been able to find traction on Indian soil. 

In January 2020, the Nielsen report monitoring the global fan base of F1 reported India as the fifth largest market (consisting of 31.1 million fans) in the world. India reported an 87% increase in the audience through television and online streaming.  There exists a massive market for the sport which, due to several external factors, has not been tapped into in India. These various issues as well as the possible roadmap moving forward will be discussed as part of this research article. 

The yellow flags along the way: issues and obstacles

Formula One has been one of the most recognised sports all across the globe.  After the FIFA World Cup and the Summer Olympics, it is one of the most popular spectacles in the sporting industry.  India, however, did not have any broadcasting deals for the same and the sport was thus inaccessible to the audience. Vicky Chandok, the former president of the FMSCI reminisced how difficult it was to bring the sport to the television sets of India and the Federation had to pay Doordarshan for the broadcast of this global phenomena. Once the sport reached the masses of the country, the fervour increased and as of 2003, F1 had nearly 360 million viewers for Doordarshan and other private channels. Owing to the rising popularity of F1, the then FIA (The Fédération Internationale de l’Automobile) President Bernie Ecclestone agreed to a deal with Doordarshan for  free coverage in India. However, a major dent to this growth came in the form of the Tobacco Bill, passed in the year 2001, which prohibited the advertisement of Tobacco on digital platforms. This resulted in the discontinuation of the free coverage by Doordarshan and hurt the viewership numbers in India.  ESPN and Star Sports continued the broadcast and helped the fan base grow further. 

The green flag: ignition 

The early half of the 2000s saw an immense growth in the viewership and popularity of F1 in India. This was down to several factors. The former “King of Good Times” Vijay Mallya had been sponsoring teams since the late 90s, with Kingfisher backing the Toyota team. In the year 2008, the Business Mogul would then enter team ownership by creating Force India. This further created a sense of belongingness for the Indians towards the sport and this was backed by the rise of Narayan Karthikeyan who raced for the Jordan team in the 2005 season and Karun Chandhok who drove for the Hispania as well as the Lotus teams in 2010 and 2011 respectively. 

As early as 1997, talks had begun for hosting the Indian Grand Prix. The infrastructure required for hosting such an event is massive and requires support from the government. The proposal to build a new circuit was rejected by many of the major cities owing to the lack of financial assistance provided by the State Governments.  However, in 2007, the Indian Olympic Association (IOA) and the former CEO of F1 group Bernie Ecclestone entered into a provisional agreement to finally host the inaugural Indian Grand Prix at the Buddh International Circuit in Greater Noida. 

On 30^th October 2011, when the sound of the engines reverberated throughout the Buddh International Circuit and the lights went out for the inaugural Indian Grand Prix, it was destined to be a historic moment that would pave the path for India’s relationship with F1. More than 100,000 spectators turned out for what was the first Grand Prix held in the subcontinent. The inaugural race, hosted by India, was perceived by all fans across the world as an unqualified success. The event far exceeded the expectations and promised a better future for motorsports moving ahead. However, the optimism was short-lived.

The red flags: end of the ride

The early promise generated by the sport would soon face severe red flags on its journey, the first being the declining numbers at the event, from 100,000 in the 2011 edition, soon dipped to 65,000. This was expected by the officials but further reduction in attendance raised concerns among the organisers.  However, this wasn’t the deal-breaker for the marriage of F1 and India. 

The real issue was the lack of government support for the F1 which wasn’t even considered as a sport in India. The Ministry of Sport called it more of an entertainment exercise for commercial gains and failed to recognise the sporting aspect of the same. This was an obtuse view held by the Ministry as it failed to appreciate the nuances of Formula One as a sport and the training and effort required to compete at the highest levels. F1 might not be on the priority list of the Government, however, the upside of hosting of events of such magnitude cannot be understated. 

The government had made exemptions in the same year for the ICC Cricket World Cup by exempting it from income tax and granted them further special tax exemptions owing to the nature of the event. Such a preferential treatment was not afforded to F1 unfortunately. Furthermore, the events were categorised under Entertainment and were charged 65% in taxes. 

In 2011, out of the 19 locations where the races were organised, in 16 of those venues, the government took the initiative of shouldering a part of the licensing fee and created certain exemptions and incentives for the FIA to host the races and have also actively promoted the event across the nation. 

The Grand Prixs hosted in India were backed by the Jaypee Group, who had to foot a $500 million bill across the three years, without any support from the government. Such a model was doomed to fail from the start as no private entity can sustain expenses of this nature without any monetary support from external sources.  As a result, Jaypee Group incurred heavy losses and could not shoulder the responsibility of hosting such an event after the 2013 Grand Prix. The event was pulled off from the 2014 and 2015 calendars and the five-year plan of hosting the races in India came to a premature divorce. 

Recommendations for revival 

As of 2020, the Buddh International Circuit, a state of the art facility which now lies defunct, is emblematic of the rocky road faced by F1 in India. In a country that has often favoured one sport’s popularity over the others, it does seem difficult to revive a sport which can be considered niche for the Indian market. 

The first step towards the revival would be to give the sport the due recognition that it deserves as a sport and not an entertainment exercise. The government must realise the importance of being open to such global spectacles which help boost the profile of a nation. The government’s support by providing exemptions and incentives for the hosting of such events could do wonders for the sport as it would reduce the burden on private entities. 

Another problem which was faced during the 3 Grand Prixs was the logistical issues owing to the different customs and excise duties which resulted in bureaucratic delays and lack of efficiency. Events of this magnitude require a different approach whereby, separate by-laws or exemptions must be afforded for the smooth functioning. 

The FIA itself needs to rectify its approach in India. During their three year stint, they did not market their “product” by themselves and it was the teams and their sponsors who were more active in the promotion of the event. The cost of attending such an event is exponentially higher than any other sporting event which takes place in the country. To attract more fans, it is important to start off with lower pricing of the tickets so as to create a wider audience and generate higher attendance. Such a step would help better penetrate the market in India. Furthermore, it has been seen how certain races across the globe have become a “tourist- attraction”, owing to their popularity.  The same effect could be replicated by the Indian Grand Prix in the future by pricing itself as per Indian standards so as to allow greater economic benefits arising out of the event. 

The chequered flag: conclusion

Formula One continues to be one of the most popular sports all across the globe, with an audience of 1.9 billion people. Its popularity cannot be understated and for a country that aspires to host and compete at the highest levels with other nations with respect to sports, it becomes paramount to revive the Indian Grand Prix.  The country has often been criticised of mismanagement when dealing with such sporting events and thus, embracing Formula One as a sport and to reconcile with it would be a step in the right direction. The market in India for F1 cannot be under-estimated. and it becomes important to maximise the popularity it generates amongst the population. It is vital for the nation to broaden its horizons and to give F1 the acceptance and recognition that it deserves as a sport. The future legislations on sports law and policy in India must ensure that the ambit and scope of definition of sports is wide enough to accommodate F1, which might not be a traditional sport, however the level of skill and expertise required to perform cannot be downplayed. The economic benefits to the country as well as the boost in profile in the eyes of the world are not ordinary incentives and must be carefully considered in the long-run. This could further provide an impetus for the growth of motorsport culture in India and could help provide the right platform for teams and drivers in the future. The return of F1 to the Indian soil must be accelerated without the speed-breakers of the years gone by, hampering the joy-ride this time.

*For any query, feedback or discussion, the Author can be contacted at [avirathpareek1408@gmail.com].

PREFFERED CITATION – Avirath Pareek, Finding the Formula For F1 in India, SLPRR, <https://sportslawandpolicyreviewreporter.com/?p=933> October 7, 2020.