The Bollywood film industry in India started out as almost a folk movement whereby ancient stories were retold and given a Hollywood sheen. Of course there would be a lot of copyright infringement issues. But now that the industry is thriving, this can be rectified by writing and adhering to new laws.
No, copyright infringement is not a significant issue in the Bollywood film industry, because Bollywood is taking its cues from the United States. They understand that strong respect for copyright is critical to having a strong film industry. The country with much larger issues with copyright is China. They are much worse than Bollywood on the issue of copyright.
Copyright infringement is an issue of decent importance, but more in the way that reform is required to address it, rather than as a serious problem for the survival of the industry. Bollywood, in spite of some impact copyright infringement might have, is still doing great, and making a big deal of the issue is more a money grab than anything else.
It is not a copyright infringement a significant issue in the "Bollywood" film industry. I am sure you have seen a Bollywood movie at least once. They actually produce more movies a year then Hollywood does and most have that Indian feel to them. They do not have a copyright issue but they usually have the same boring plots over and over.
Bollywood movies seem to follow the same traditional format. There are always musical and/or dance numbers. There is some element of love involved as a couple tries to make it after overcoming impossible odds. Bollywood makes more movies annually than Hollywood. It's hard to come up with original plots and original actors. It's not so much as a copyright issue as it is an originality issue with a glut of movies made on the Indian subcontinent.