Most industry experts agree that with the specter of a huge manpower shortage and lack of decent infrastructure, the Indian animation and gaming industry is falling behind the potential growth it can manage.

The fears are revealed in a NASSCOM report which estimates the global animation market and gaming market to be $122 billion by 2010. However, the Indian animation and gaming industry will account for less than 2% of the worldwide market in 2010 despite impressive growth forecasts.

Some experts also view that although there is tremendous potential for Indian companies to grow but this may not be possible if they do not come out of the outsourcing mindset and look to grow the local market by developing local content and intellectual property.

Meanwhile Andhra Pradesh is all set to become the first state to have a separate policy for the animation and gaming industry, Ratna Prabha, state principal secretary, IT, told the Nasscom Animation and Gaming conference in Hyderabad.