Mumbai, April 2 (Reuters): Last year, a young superhero criss-crossed film screens in India with a golden mace as he fought fire-spitting demons and serpents to save good guys.

In a country that never tires of high-decibel formulaic musicals, the animated exploits of chubby Hanuman ? the monkey-god revered by Hindus ? was a surprise hit.

Walt Disney bought the rights, putting a stamp of approval on India’s home-made animation films and encouraging animation outsourcing firms to turn to production.

Once just outsourcing sweatshops that sketched, painted and digitised ordered content, Indian animation firms are now signing co-production deals with international studios to boost their earnings, industry officials say.

With annual revenues of $310 million, the industry has grown so far on the back of an explosion in outsourcing of animated computer images for TV, cinema and the Internet at a quarter of the cost of that in the US and Britain.

Now big players are moving away from outsourcing to claim ownership of their products and share copyrights and profits.

“Creative co-production gives greater control and ownership and it takes the companies up the value chain,” said Sunil Mehta, vice-president of National Association of Software and Service Companies (Nasscom), the main industry lobby.

The trend is expected to help India’s animation and gaming market quadruple to $1.3 million by 2009 and employ about 30,000 animators, says Nasscom.

Animation companies say growth in the outsourcing model has begun to plateau, but co-production was yielding multiple sources of revenue from merchandising to licensing. Companies are reluctant to give price details but say profit margins are higher in co-production because the life cycle of a product is longer, unlike in a service deal where it ends with the completion of the animation.

Co-production will contribute 70 per cent of profits in about four years, double the levels now, estimates showed.