India’s online gaming industry is struggling with a tough 28% tax rate and bans on skill-based games in various states, raising doubts about its future. Funding for gaming startups is also starting to dry up.
Anuraag Saxena from the E-Gaming Federation pointed out that while a ₹2 ketchup sachet in India has a quality check, online games do not have any security or quality assurance. He highlighted that consumers are losing money on unreliable games without any recourse, and suggested that a whitelist of approved games could help.
The E-Gaming Federation has called for self-regulatory bodies to promote ethical practices and ensure a stable regulatory environment, but the government has yet to approve this. Currently, the Ministry of Electronics and Information Technology (MeitY) is the regulator and plans to develop a framework for certifying online games that involve monetary transactions.
Despite these challenges, Saxena predicts the legitimate gaming industry in India will grow by 20% by the end of 2024-25, reaching ₹23,100 crore.
The gaming industry globally is booming with over 1.2 billion players, and India contributes significantly with 500 million active gamers. However, the sector has been hit hard by the higher 28% GST rate and state bans. This has led to layoffs and the closure of several startups.
The Supreme Court is currently reviewing petitions against the GST hike, a crucial step for the industry. The E-Gaming Federation’s report stresses the need to differentiate between skill-based and chance-based games for better regulation.
Skill-based games are taxed heavily while illegal offshore betting companies continue to operate in India with little oversight. The gaming industry is advocating for a more sensible approach to GST and better regulations to attract investment.
Saxena believes that with appropriate regulations, the gaming sector will become more attractive to global investors and better serve national and consumer interests.
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