Key to this was the emergence of the masala film genre, which combines elements of multiple genres (action, comedy, romance, drama, melodrama, musical).

The masala film was pioneered in the early 1970s by filmmaker Nasir Hussain, directed by Manmohan Desai and written by Kader Khan.

Credit for the term has been claimed by several different people, including the lyricist, filmmaker and scholar Amit Khanna, There was clearly a huge market for talkies and musicals; Bollywood and all the regional film industries quickly switched to sound filming.

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It combined the dacoit film conventions of Mother India and Gunga Jumna with that of Spaghetti Westerns, spawning the Dacoit Western genre (also known as the "Curry Western"), which was popular in the 1970s.

However, the 'art film' bent of the Film Finance Corporation came under criticism during a Committee on Public Undertakings investigation in 1976, which accused the body of not doing enough to encourage commercial cinema.

It was this "chance juxtaposition of two pairs of rhyming syllables," Holly and Tolly, that led to the portmanteau name "Tollywood" being coined.

The name "Tollywood" went on to be used as a nickname for the Bengali film industry by the popular Calcutta-based Junior Statesman youth magazine, establishing a precedent for other film industries to use similar-sounding names, eventually leading to the coining of "Bollywood".

Mithun Chakraborty, Naseeruddin Shah, Jackie Shroff, Sanjay Dutt, Anil Kapoor and Sunny Deol, which lasted into the early 1990s.

Actresses from this era included Hema Malini, Jaya Bachchan, Raakhee, Shabana Azmi, Zeenat Aman, Parveen Babi, Rekha, Dimple Kapadia, Smita Patil, Jaya Prada and Padmini Kolhapure.

The 1970s thus saw the rise of commercial cinema in the form of enduring films such as Sholay (1975), which consolidated Amitabh Bachchan's position as a lead actor.

The devotional classic Jai Santoshi Ma was also released in 1975.

Kapoor followed the "tramp" style of Charlie Chaplin, Anand modelled himself after the "suave" style of Hollywood movie stars like Gregory Peck and Cary Grant, and Kumar pioneered a form of method acting that was similar to yet predated Hollywood method actors such as Marlon Brando.

Kumar, who was described as "the ultimate method actor" by Satyajit Ray and is considered one of India's greatest actors, inspired future generations of Indian actors; much like Brando's influence on Robert De Niro and Al Pacino, Kumar had a similar influence on later Indian actors such as Amitabh Bachchan, Naseeruddin Shah, Shah Rukh Khan and Nawazuddin Siddiqui.

"Tollywood" is now also popularly used to refer to the Telugu film industry in Telangana and Andhra Pradesh.