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It's unknown if it was derived from "Hollywood" through "Tollywood", or was inspired directly by "Hollywood". Other sources state that lyricist, filmmaker and scholar Amit Khanna was its creator. Her column entitled "On the Bollywood Beat" covered studio news and celebrity gossip. Film journalist Bevinda Collaco claims she coined the term for the title of her column in Screen magazine. "Bollywood" was probably invented in Bombay-based film trade journals in the 1960s or 1970s, though the exact inventor varies by account. Deming, an American engineer who helped produce the first Indian sound picture. It was used in a 1932 American Cinematographer article by Wilford E. The term "Tollywood", for the Tollygunge-based cinema of West Bengal, predated "Bollywood".

"Bollywood" is a portmanteau derived from Bombay (the former name of Mumbai) and "Hollywood", a shorthand reference for the American film industry which is based in Hollywood, California.

2.2 Challenges and market expansion (1930s–1940s).

In more recent years, the distinction between commercial masala and parallel cinema has been gradually blurring, with an increasing number of mainstream films adopting the conventions which were once strictly associated with parallel cinema. Alongside commercial masala films, a distinctive genre of art films known as parallel cinema has also existed, presenting realistic content and avoidance of musical numbers. Masala films generally fall under the musical film genre, of which Indian cinema has been the largest producer since the 1960s when it exceeded the American film industry's total musical output after musical films declined in the West the first Indian musical talkie was Alam Ara (1931), several years after the first Hollywood musical talkie The Jazz Singer (1927). The most popular commercial genre in Hindi cinema since the 1970s has been the masala film, which freely mixes different genres including action, comedy, romance, drama and melodrama along with musical numbers. Earlier Hindi films tended to use vernacular Hindustani, mutually intelligible by speakers of either Hindi or Urdu, while modern Hindi productions increasingly incorporate elements of Hinglish. In 2001 ticket sales, Indian cinema (including Hindi films) reportedly sold an estimated 3.6 billion tickets worldwide, compared to Hollywood's 2.6 billion tickets sold. film industry to become the largest centre for film production in the world.

As per data from 2014, Hindi cinema represented 43 percent of Indian net box-office revenue Tamil and Telugu cinema represented 36 percent, and the remaining regional cinema constituted 21 percent.

In 2017, Indian cinema produced 1,986 feature films, with the Hindi film industry as its largest filmmaker, producing 364 Hindi films the same year. The industry is part of the larger Indian cinema-the world's largest by number of feature films produced, along with the Cinema of South India and other Indian film industries. The popular term Bollywood, used to refer to mainstream Hindi cinema, is a portmanteau of "Bombay" and " Hollywood". Hindi cinema, popularly known as Bollywood and formerly as Bombay cinema, is the Indian Hindi-language film industry based in Mumbai (formerly Bombay).