In a tiny booth in a teeming Mumbai bazaar sits a potential saviour of the Indian music industry. He’s not a budding sitar player, or a famed Bollywood composer. He’s a mobile phone repairman and a small-time bootlegger.

Hemant, who prefers not to give his full name for fear of attracting a police raid, earns part of his living by illegally loading mobile phone memory cards with pirated media content. Customers drop off the memory card from their handset and place an order – usually something like, “Two gigabytes of the latest film soundtracks; and 1GB of video please.”

Within 30 minutes, the card is loaded from the battered PC that holds Hemant’s library of Hindi pop. Prices are negotiable, but to start he asks for 100 rupees (£1.30) for 100 songs – about one third of the cost of buying music on a legitimate CD. He is, in effect, a physical version of Apple’s online iTunes music store in a land where only a sliver of the population can afford home internet access but every second person has a mobile.

There are an estimated 80,000 others like him in the same racket across the subcontinent.

Industry executives concede that the model makes sense. India has more than 500 million mobile phone subscribers. By contrast, Shridhar Subramaniam, Managing Director of Sony Music, India, estimates that even at the devices’ peak the number of CD players was only about 40 million.

“Only about 16 million Indians have access to the internet,” he added. “The peak penetration of cassette players was perhaps 40 million. Mobile phones represent a staggering multiple of these numbers. It’s obvious that the mobile phone is the predominant music playing device for us.”

Now the industry is hoping to persuade pirates like Hemant to go legitimate, by selling them licences that allow them to upload music legally. The scheme, called MMX, is backed by more than 140 record labels and is being piloted in three large states: Andhra Pradesh, Bengal and Punjab.

“We’re pulling the enemy into our ecosystem,” Mr Subramaniam explains. “We’re aware that the innovation is happening at street level, and that it’s in our interest to harness it.”

The project rests on the premise that a licence sold is a whistleblower recruited. Mr Subramaniam says that police raids initiated by members against rival bootleggers are helping to combat India’s staggeringly high rates of piracy.

It also hinges on the idea that mobiles will be the main conduit for music in emerging markets where expensive iPods are out of reach for the masses but basic handsets are common.

Last May, Bharti Airtel, India’s largest mobile operator, announced that for the first time the company's music revenues had exceeded those of Sa Re Ga Ma, the country’s largest music label.

The question, however, is whether Bharti really sells music or is in the business of peddling novelties.

It is estimated that about 30 per cent of the music industry’s revenues in India – about US$150 million a year – now comes from sales of “ringback tones”. This is a slightly bizarre music product – in that the person who pays for a particular tune never gets to hear it. Rather, a snippet of a track is downloaded to a consumer’s mobile handset. It is heard only by callers who dial that buyer, while they are waiting for their call to be answered.

Ringback tones have provided a much needed supplement to the earnings of India's mobile operators, which are slashing the cost of voice calls (which were already the cheapest in the world) in a brutal price war.

But they are no good for selling entire songs, let alone albums – and this is where MMX is supposed to step in.

The problem is that India’s mobile generation mirror their internet-loving Western peers in one important respect: given the chance to get something for free, they feel no moral compulsion to pay to stay on the right side of the law.

A survey carried out last year by the research company Synovate Music Matters found that more than 80 per cent of young Indians felt that "music is a very important part of my life". More than 40 per cent listened to music on their mobiles. But only about 10 per cent would contemplate spending money on a download.

Ominously for the MMX initiative, even Hemant's uploading racket is suffering the effects of piracy. A year ago, his bootlegging business did very nicely. But nowadays his customers are swapping songs among themselves, using new phones equipped with Bluetooth facilities that allow tracks to be zapped between handsets at close range.

Street level innovation, it seems, remains one step ahead of the industry. “It’s only natural,” Hemant shrugs. “You can’t lock up music – people will always find a way to hear it for free.”

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