India is gearing up to unlock the potential of its online gaming industry, receiving significant support from the government after initial hesitation. In his Independence Day address, Prime Minister Narendra Modi emphasised the vast market for gaming, urging India to establish itself as a key player in a sector predominantly dominated by foreign entities in terms of game production and revenue generation. He suggested that India should leverage its rich heritage and nurture new talent to make a mark in the global online gaming industry. His remarks carry significant weight for game developers across the country.
Currently, the market is dominated by foreign titles due to a lack of homegrown games. The Indian government’s recent push for local game development is a crucial step toward bridging this gap. The government’s newfound attention to online gaming industry is a positive sign for the industry. Although India has 442 million gamers and is the second-largest gaming market globally behind China, the country’s esports ecosystem lacks major titles. The online gaming sector, valued at around $3.1 billion, is expected to grow to $8.92 billion within the next five years, according to a recent report by Grant Thornton Bharat and the E-Gaming Federation.
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Online gaming industry’s struggles
The gaming industry, policymakers, and legal experts are calling for pro-active steps from the government to support this sunrise sector to make India a global hub for gaming. Given the potential of the online gaming industry to contribute to education, skill development, and economic growth, the government must adopt an open-minded approach and liberalise the tax regime for the industry, they say. Currently, high tax rates and ambiguous guidelines on permissible games hinder the sector’s growth. High taxes may push Indian gamers toward international platforms with more favourable tax environments or drive the industry into regulatory grey areas. A fair and balanced tax regime is essential for fostering the industry’s development.
The gaming industry faces significant challenges due to the lack of distinction between Games of Skill and Games of Chance. Although they may appear similar on the surface, these two types of games serve vastly different purposes and involve varying levels of player engagement and risk. Empirical evidence suggests that long-term success in online gaming is predominantly driven by skill, with chance playing a minor role. This distinction is crucial for regulatory and taxation purposes.
While various high courts in India, including those in Kerala, Karnataka, Madras, Rajasthan, Punjab, Haryana, and Bombay, have clearly distinguished between Games of Skill and Games of Chance, there remains a persistent lack of awareness among civil society, gamers, and industry stakeholders. It is high time these misconceptions are dispelled and a more informed understanding of skill-based gaming is fostered.
Building a talent pool for future
As the future of jobs, leisure, and skills evolves, India must build a stronger pool of talent. Premier institutions like IIMs and IITs should focus on curriculums and pedagogies oriented towards future skills rather than those of the past. India has the potential to nudge its talent toward gaming and game development, allowing the country to produce world-class products domestically and sell them globally. While India produces about 40% of the world’s games, indicating a high level of development activity, the country captures less than 1% of global gaming revenue. This disparity highlights the need for further development in the sector.
Positive steps have been taken to support the industry. Both state and central governments have recognised the need to support India’s growing tech landscape, leading to a surge in initiatives aimed at catalysing innovation and job growth. Gaming hubs and centres of excellence are emerging across the country, attracting investments and creating new opportunities.
Leveraging its massive mobile-first market, India is poised for significant growth with the rollout of 5G technology. E-sports, particularly on smartphones, are expected to gain popularity, especially in regions with limited access to desktop computers.
The global community has also begun to recognise India’s potential as a significant player in the esports arena. India’s esports talent pool continues to grow, with several players achieving international recognition. This will not only cement the country’s image on the global esports stage but also open new avenues for collaboration and investment.