By Rameesh Kailasam & Madhabi Sarkar
India is one of the fastest growing economies of the world. With a population of nearly 1.4 billion, more than half of India’s population is under the age of 40 years. India has embarked on a journey to transform its economy through three essential pillars, digital technology, infrastructure development and sustainable growth.
Over the last decade, India has seen an unprecedented digital boom, including the implementation of the Aadhaar ecosystem, UPI, as well as digital payments. The numbers speak for themselves – as of December 2022, India has a teledensity of 84.56% (134% in urban areas) and more than 830 million telecom subscribers. This data shows a huge market for digital goods and services. This very start of India’s ecosystem, in sports companies, can measure the benefits of India’s digital sophistication if the government provides ecosystem support, which is important to connect through light touch regulations.
On December 23, 2022, the government has been notified under the India Business (370th Amendment) Rules, 2022 to invest in the services related to electronic gaming and information technology (MeitY). In addition to this, MeitY, on January 2, 2023, issued the Draft Information Technology (Media and Digital Media Code of Ethics) Amendment Rules (“Draft Rules”) to provide a responsible and responsible regulatory framework for online game intermediaries.
The gaming industry in India has tremendous development potential, considering the teledensity and smartphone craze in the country. The gaming industry today is in the form of Make-in-India and Digital India. There are more than 500+ Indian online gaming startups that have attracted more than `20,000 crore in investment/FDI and are expected to attract more than `50,000 crore by FY25. According to the AVGC-force report organized by the government, India is expected to become one of the world’s leading markets in the game industry. Growing over the next five years, it is expected to triple its current value and reach $3.9 billion by 2025. According to a KPMG report, India already has over 400 gambling companies and 420 million players, second only to China.
Realizing the potential early on, the Indian government correctly assessed the significance of the sports industry. As a result, many game and multimedia startups are looking to run into the game. But they are detained for various reasons.
First, we see reports of some states equating online gaming with gambling. Despite a recent Supreme Court ruling clearly stating that games of skill are perfectly legal, there is a general tendency in the public sector to discourage the online gaming industry from observing one or two games in order to develop a perception of it.
This lack of clarity creates an unfortunate perception of the issue – banks become risk-averse from being held responsible for non-compliant payments. For this reason, gambling companies and markets do not want to be involved, bringing different reasons. As in-app purchases are a significant source of revenue for game developers/marketers, this becomes an existential risk. The government, RBI, banks, and financial institutions should therefore devise a framework that would facilitate the transfer of payments between gamers, publishers, and other institutions, as long as they comply with the applicable law. The gaming industry can do its part to mitigate any fears that regulators have.
Another missing element seems to stem from a lack of basic understanding of business on the field. It is important that police and tax departments become familiar with and understand how the industry works and the role of each department in the process. There is a need for a government-industry collaborative for capacity building and awareness in this regard towards government officials and others involved in this ecosystem.
The game sector has developed significantly in the last decade. Games have become more interactive and lifelike, integrating virtual and augmented reality and the development of what the industry calls Massively Multiplayer Online Games (MMORGs)/ Massively Multiplayer Online Role-Playing Games (MMORPGs). According to experts, high-speed internet connectivity through 5G and faster cards will further accelerate this trend, leading to even more immersive and interactive games with low latency. Therefore, telecom company and government investments in telecom infrastructure should be prioritized. In addition, adaptive policies in the form of tax benefits and so on should be extended to encourage industry players. Training program for alexandrian game, while skill-based training in coding, multimedia and animation should be the focus for our educational institutions. All these have become India’s aid from power play. At the same time, it is notable that the Union government is rising up to the moment and working on this matter. The massive plan is backed by the tax government’s need of the hour.
About the authors: Rameesh Kailasam & Madhabi Sarkar respectively, CEO, and senior manager (strategy), Indiatech.org. Opinions are personal.