BW Gaming World
The Union Budget in 2023 comes at a challenging time for the government with the dominant narrative globally being that of slowing growth, reduced demand, elevated inflation, and tech companies reducing their workforce. Against that backdrop, the sector that stands out for its growth trajectory, innovations, technology IP, and job creation is the online gaming industry, which is in its sunrise phase in India.
In FY 2022, there were over 42 Crore gamers in India (according to KPMG), of which nearly a quarter was paying users. The industry contributes around INR 2,200 crore towards GST, while investments in the sector are expected to rise to INR 50,000 crore in the next three years. Despite such impressive numbers, India has just over 1 per cent market share of the global gaming sector, while China and the U.S.A. have cornered 26 per cent, and 23 per cent respectively.
So, there is a massive runway available if we focus on enabling the sector to grow and remove some of the challenges the sector faces, specifically around taxation and continuity of business. Budget 2023, which will be Finance Minister Nirmala Sitharaman’s and this government’s last full budget before the 2024 general elections, offers a great platform to do it.
One of the key steps the Government can take to encourage the growth of the Online Gaming ecosystem is to give ‘Mission’ status to the Animation, Visual Effects, Gaming and Comics (AVGC) sector, with a dedicated budgetary allocation. This will go a long way in building the infrastructure that will enable the sector to innovate, export Indian-origin IP globally, create thousands of high-skill jobs and nurture the entrepreneurial spirit.
A ‘mission’ approach can lead to dramatic advancements at the ground level and deliver great results in a relatively short span of time, as we have seen with the Swachh Bharat Mission, or with Mission Shakti.
Another expectation of the online gaming industry from the budget is that the Hon’ble Finance Minister enables a taxation and compliance framework that is moderate and encourages growth while ensuring taxes collected from the sector keep rising in a sustainable manner.
This includes maintaining the status quo on existing TDS norms that impact the sector, as well as finalising a fair and moderate tax framework with globally accepted valuation benchmarks when it comes to GST. Online gaming in India runs the risk of becoming unviable, for platforms and players alike, if the taxation policy on either front becomes too stringent, eventually leading to losses for the exchequer.
The Government, under the visionary leadership of Hon’ble Prime Minister Shri. Narendra Modi has consistently shown positive intent in ensuring the sector flourishes.
First, the AVGC task force was constituted in the Budget 2022 to recommend ways of boosting the sector. And recently, the Ministry of Electronics and Information Technology (MeitY) published draft rules for online gaming under the IT Act 2000, which have been highly welcomed and commended by the industry for their light-touch approach to regulating the skill-gaming sector, while preventing illegal gambling operations.
While the final rules are awaited, their focus on protecting consumers and ensuring fair play through the setting up of independent SROs, certification marks, auditable technical standards, and grievance redressal mechanisms, will provide the industry with a much-needed central framework to operate in.
By continuing in the same vein of providing the legitimate, online skill-gaming industry with a supportive ecosystem of regulations and taxes, the Hon’ble Finance Minister can through the upcoming budget cement Online gaming as one of the most important cornerstones of Digital India, and a key contributor to our aspirations of becoming a trillion-dollar digital economy.
It is an exciting time for the online gaming sector and 2023 will be a crucial year that determines the trajectory for the sector.
Written by Sumanta Dey, Senior Director – Corporate Affairs, Head Digital Works
