By Monica Chadha BBC correspondent in Bombay

Bollywood films are widely pirated

The country's largest motion picture processing laboratory, Adlabs Films, has done a deal with Singapore technology firm GDC for the new projectors.

Converting Indian movies into a digital format will save in distribution costs, as well as providing better picture quality in terms of imaging and colour.

It could also help to control piracy, which would benefit film distributors and cinema owners in the long run.

Expensive business

Founder of Adlabs Films, Manmohan Shetty, told the BBC that his company intended to retrofit at least 400 theatres across India by April 2004.

He said he saw huge potential for this project as there were at least 12,000 cinemas across India and most of them use reel projectors.

Retrofitting of a theatre involves installing a digital film server and a digital projector in the hall.

The feature film itself will be stored in a high-capacity disk drive, double the size of a cigarette packet.

The film will be digitally encrypted and capable of being distributed to various theatres through electronic means like fibre-optic cable or satellite.

However, the costs run very high. A digital projector costs nearly US $100,000 and digitising a full length feature film costs nearly $50,000.

Fighting piracy

Mr Shetty said he was realistic about the project. He said that although the initial costs were high, they would prove profitable in the long-run, as cinema owners would have to bear few distribution costs.

He also said they would be able to show movies on the first day simultaneously across the country and that would mean good returns for them in the first week itself.

At present, films are released at different times in different parts of the country, bringing in greater profits for theatre-owners who release it first.

This technology, although expensive, could also be a solution for the Indian film industry to combat piracy.

The industry loses about $30m due to piracy every year and has become an even bigger menace in recent times.

For the Indian film industry, which churns out at least a 1000 films per year, this could only mean good news.