The film piracy industry in India is worth Rs.1,500 crore and its profits are being used to fund terrorism in the country, a top official of CD-DVD manufacturer Moser Baer said on Tuesday.

"The piracy industry in India is Rs.1,500 crore and much of it goes to funding terror," Moser Baer India chief executive Harish Dayani told .

"Rising piracy and the emergence of DVD technology have shrunk the average cost of movie viewing for an Indian family to Rs.3." Nearly 40 million families in India have access to DVD technology and film pirates sell nearly 80 million DVDs each year.

"The rate for each pirated DVD is Rs.25 and the cost of a raw DVD is a mere Rs.11 to Rs.12. Imagine the profits they are reaping in," Dayani said, adding that Moser Baer was forced to come up with a "revolutionary pricing strategy" to popularise film CDs and DVDs in the face of piracy.

"When we first announced that we would sell movie CDs and DVDs for $1 some years ago, the US production houses scoffed at us. They were selling the same product for $20. But look at the scenario today. Walmart has started selling 'Casino Royale' DVDs for $2. Moser Baer's pricing logic has worked," Dayani said.

Piracy is weaning away around 50 lakh potential viewers from the movie theatres by giving them cheaper options, he added.

"First, it affects the flow of patrons to cinema halls. It cuts down on revenue coming in from home video. Piracy also drops TRP (television rating points) as far as cinema broadcast from satellite is concerned," he said.