Bollywood films are multi-million dollar productions, with the most expensive productions costing up to 100 crores rupees (roughly USD 20 million). Sets, costumes, special effects, and cinematography were less than world-class up until the mid-to-late 1990s, although with some notable exceptions. As Western films and television gain wider distribution in India itself, there is an increasing pressure for Bollywood films to attain the same production levels, particularly in areas such as action and special effects. Recent Bollywood films have employed international technicians to improve in these areas, such as "Krrish" (2006) which has action choreographed by Hong Kong based Tony Ching. The increasing accessibility to professional action and special effects, coupled with rising film budgets, has seen an explosion in the action and sci-fi genres.

Sequences shot overseas have proved a real box office draw, so Mumbai film crews are increasingly filming in ऑस्ट्रेलिया, Canada, न्यू झीलॅंड, the United Kingdom, the United States, continental Europe and elsewhere. Nowadays, Indian producers are winning more and more funding for big-budget films shot within India as well, such as "Lagaan", "Devdas" and other recent films.

Funding for Bollywood films often comes from private distributors and a few large studios. Indian banks and financial institutions were forbidden from lending money to movie studios. However, this ban has now been lifted. As finances are not regulated, some funding also comes from illegitimate sources, such as the Mumbai underworld. The Mumbai underworld has been known to be involved in the production of several films, and are notorious for their patronisation of several prominent film personalities; On occasion, they have been known to use money and muscle power to get their way in cinematic deals. In January 2000, Mumbai mafia hitmen shot Rakesh Roshan, a film director and father of star Hrithik Roshan. In 2001, the Central Bureau of Investigation seized all prints of the movie "Chori Chori Chupke Chupke" after the movie was found to be funded by members of the Mumbai underworld.

Another problem facing Bollywood is widespread copyright infringement of its films. Often, bootleg DVD copies of movies are available before the prints are officially released in cinemas. Manufacturing of bootleg DVD, VCD, and VHS copies of the latest movie शीर्षकs is a well established 'small scale industry' in parts of South Asia and South East Asia. The Federation of Indian Chambers of Commerce and Industry (FICCI) estimates that the Bollywood industry loses $100 million annually in loss of revenue from pirated home videos and DVDs. Besides catering to the homegrown market, demand for these copies is large amongst some sections of the Indian diaspora, too. (In fact, bootleg copies are the only way people in Pakistan can watch Bollywood movies, since the Government of Pakistan has banned their sale, distribution and telecast). Films are frequently broadcast without compensation by countless small cable TV companies in India and other parts of South Asia. Small convenience stores run by members of the Indian diaspora in the U.S. and the UK regularly stock tapes and DVDs of dubious provenance, while consumer copying adds to the problem. The availability of illegal copies of movies on the Internet also contributes to the piracy problem.

Satellite TV, television and imported foreign films are making huge inroads into the domestic Indian entertainment market. In the past, most Bollywood films could make money; now fewer tend to do so. However, most Bollywood producers make money, recouping their investments from many sources of revenue, including selling ancillary rights. There are also increasing returns from theatres in Western countries like the United Kingdom, Canada, and the United States, where Bollywood is slowly getting noticed. As more Indians migrate to these countries, they form a growing market for upscale Indian films.

For an interesting comparison of Hollywood and Bollywood financial figures, see chart. It shows tickets sold in 2002 and total revenue estimates. Bollywood sold 3.6 billion tickets and had total revenues (theatre tickets, DVDs, television etc.) of US$1.3 billion, whereas Hollywood films sold 2.6 billion tickets and generated total revenues (again from all formats) of US$51 billion.

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