Tollywood was named after Hollywood in the 30s, long before the name ‘Bollywood’ came into existence. This happened because the Bengali film industry was centered in and around the place Tollygunge. Even now, Tollygunge is considered the film para, and some of the iconic studios are located here.
As for me, and most Bengalis, we never have called the film industry in Kolkata as Tollywood, neither would we ever. The term is only used by tabloids. And I don’t think any of us care much if Telugu people use the term to define the Telugu film industry.
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