The Indian film industry first started in Calcutta in the early years of the twentieth century. The production of films in Bombay started soon after. Now Bombay produces more than half of all Indian films each year.
Like the first Bombay film, Raja Harishchandra, most of the early films were mythological. Usually seen in theatres to the accompaniment of the harmonium, tabla or violins, the movies incorporated dance sequences fairly early. Stunt movies were another staple, and Mary Evans Wadia (Fearless Nadia) was the foremost female star of this genre. Censorship was an early fact of life in all media during the British rule. However, this was limited to examining political commentary. The film censorship board was not dissolved after independence, rather its role was enlarged.
The first Indian talkie, Alam Ara, was made in Bombay in 1931. A product of the Parsee theatre, the film gave Indian cinema its first singer-- W. M. Khan. During these years many film makers consciously tried to use the medium of cinema as a means of social change. The influential IPTA (Indian Peoples' Theatre Association) was founded during this time, and its members continued to be the social conscience of the film industry even as late as the '60s.
Around this time Bombay films began to set into formulaic patterns of love stories, incorporating large numbers of songs and dances as well as choreographed violence. The star system, always very strong in Bombay, determined the success and failure of films as much as the songs. The most successful star in all of Bombay filmdom's history remains Amitabh Bachchan, whose 1975 movie, Sholay, was India's biggest earner for twenty years until it was overtaken in box-office receipts by the current supernova Madhuri Dixit's 1995 film, Hum Aapke Hain Kaun.
The late 1990's saw perhaps the worst days in the history of Bollywood. With huge costs for financing films and widespread black money transactions, organised crime often had a low-key role in the film industry. After the economic downturn of the late 90's, this role became more overt. There was headline grabbing news of murders of prominent Bollywood figures and speculation about contract killings. This was the background against which the union government in 1998 declared film-making to be an industry. This was a populist gesture, bereft of real meaning, as long as legal financial institutions did not in film making. In 1999 the first Bollywood film was insured against losses when the concerned insurance agency found that its financing and production schedule were sufficiently well documented.