This extends not only to horror, but also to genres in general. Indian cinema has produced great drama ('drama' being the collective term for artsy, literary-type stories by Shyam Benegal, Satyajit Ray and so forth), great romance (Anything made by Hrishikesh Mukherjee) and great action films (Sholay, RGV's Company, Satya and Shool). Yet speculative fiction (the concept of what if...) which gives way to horror, science fiction and the generally unknown, has never been explored, except for such vomitoriums as "Krrish", "Love Story 2050" and "Azhagiya Thamizh Magan" (check its "scifi" story here).
Correction. There are such films by Satyajit Ray as "Paras Patthar" and "Goopy Gain Bagher Bain" from his time, and three recent exceptions that plumbed into the depths of speculative fiction - "Darna Mana Hain", "Vaastu Shastra" and "Kaun". All three were RGV products and all three, despite various flaws, must be lauded. Few others have had RGV's balls in venturing into horror (although in recent times, balls seem to be all RGV has).
This is lamentable as a good horror story serves strongly to experience and thus come to terms with fear, whether of the fantastic - vampires, ghosts and aliens - or the real - psychos, criminals or even the horrors that jump out of everyday life. Which brings me to the first point of good horror fiction, which again most Indian films miss out on.
Relatable characters. Consider movies such as the first Nightmare on Elm Street, Jaws, The Terminator (not T2), Back to the Future, The Sixth Sense or even Strangers on a Train (a very effective horror film in its way). All involve every day people, and all begin with them going about their everyday lives. The whole point of the scary/weird things that follow, is that such things could happen to everyday people such as you or me. This is borne out best in Stephen King's stories, which involve people one can relate to immediately, even if they're American. What happens to them, and their response to it, becomes so relatable it is as possible in Mambalam as in Maine (where, btw, King bases most of his stories). This also establishes an important point of speculative fiction - it is not the strange event which matters, as much as people's response to it. This is best borne out for example in "The Twilight Zone", with various episodes dealing with seemingly monstrous actions that are ultimately revealed to be human, or in Back to the Future, where M. J. Fox's character, who is a normal (American) teenager, first fears he is stuck in the past for the rest of his days (imagine living your days out in the pre-Internet license-permit days) and must then worry about undoing his existence (because he is coming in between his (then young) Dad and Mom!!).
In contrast though, the characters from such speculative Indian films (with the exception of DMH, VS and best of all, Kaun) are anything but plausible regular characters. Take LS 2050 for example. The movie opens with the poor man's Hrithik Roshan, Harman Baweja crashing his dad's car and walking away. Never mind if you or I could do that, would any kid (albeit without MAJOR MAJOR issues) just walk away with a grin after trashing family property? How are we then supposed to relate to his losing his girlfriend (in a disturbingly hilarious scene), let alone his discovery of the futuristic world? Indeed, can you or I relate to someone so dense as to go fifty years into the future to find a reincarnated girlfriend, rather than 24 hours back to prevent her death? The same applies to Krrish, where we are supposed believe somebody who's been taken out of school and held in seclusion by his grandma will not grow into a Freudian wet dream, but a superhero who saves people simply to impress his girlfriend. Real characters have real responses - whether the event itself is real or not - that we can appreciate, and are the first need for any speculative fiction, and especially horror, to work.
The second point or purpose of speculative fiction is to provide a metaphor for the real world and make a point about it. Take for example "Rossum's Universal Robots". Never heard of it? Well, that's because it's a Czech play made in 1921. The play gave rise to the use of "robot" (based on a Czech word for labourer) and dealt with a world where robots are created and kept as replacable artificial workers in the worst conditions possible, only to eventually rise up against humans and form a civilization of their own. Interestingly, the Gilded Age had ended in the US, while the October Revolution had just occured in Russia. The point the play was making resonated one way or another with everyone, and thus did the word robot come about. This applies to all of the best horror/science fiction films in existence. Dracula tapped into the Victorian fear of STD's, infectious diseases and taboo sexuality. Frankenstein tapped into the same ideas as RUR (though earlier), of artificial life and the implications therein. "Invasion of the Body Snatchers" tapped into the fear of both Communism and McCarthyism. George Romero's zombie films are each recognized as allegories for specific topics of the era, from race relations to foreign invasions and social equality. And the Alien series, with the parasites that burst out of stomachs, breed out of control and look kind of phallic deals with everybody's fear of hoo-hoos or ha-has.
Which is why we need good Indian horror films. We in India have been plagued with enough ills over the years to come up with great metaphors. For example, our zombies: the crowds who protest at the drop of the hat, demonstrating peacefully by throwing stones over cartoons and paintings that hurt feelings. Our vampire: the babus who bite people on the neck and elsewhere, draining all but those with the capacity to become like them. Our werewolves: the Naxalites who appear out of nowhere at night, kill mercilessly and disappear to re-emerge during the day as civilians. Our chestburster Aliens: Wahabbi Islam, which parasitically attaches to people, only to explode out of them, sometimes blowing them up, often others. And our Blobs, giant hideous masses that absorb things and grow big enough to engulf States or nations: Mayawati and/or Jayalalitha.