Indian gaming industry needs stable regulatory environment: Sameer Barde

The industry's worry is the "knee-jerk reaction" of states in regulating the industry, Barde said

India’s online gaming industry is growing and government regulations will be good for it, said Sameer Barde, chief executive officer of the E-gaming Federation (EGF). The industry's worry is the "knee-jerk reaction" of states in regulating the industry, he told Raghav Aggarwal in an interview. Edited excerpts:
 

How has 2022 been for the online gaming industry in India?

It was a mixed bag. In terms of business 2022 has been robust. The other positives were the finance minister announcing the Animation, Visual Effects, Gaming and Comics (AVGC) task force in the Budget (in February); the Ministry of Electronics and Information Technology (MeitY) being proactive in doing industry consultations, and the constitution of the inter-ministerial task force to look at the sector. The Centre taking steps to control gambling companies and surrogacy ads was another positive. 

What were the concerns?

The states continuing with a knee-jerk reaction to the industry was a major cause of concern. Tamil Nadu was a classic case where the state government went against the order of its own High Court. It impacts the confidence of investors, the industry and the players. Another cause of concern is the back-and-forth going on related to the Goods and Service Tax (GST) rules.

What changes in taxation are being proposed?

Currently, an 18 per cent tax is levied on gross gaming revenue (GGR) for games of skill. What is being proposed is that the tax is raised to 28 per cent, a nearly 55 per cent hike in the current tax rate. Also, currently, the companies have to pay tax on GGR, which might get changed to gross gaming value (GGV).

How will it impact the industry?

If it is 28 per cent on the GGR, the industry will still be able to absorb that. The industry is growing at 35 per cent CAGR. However, if 28 per cent is levied on GGV, it would mean a 1,700 per cent hike in the tax. There will be no business left.

You have met with the group of ministers deciding taxation for casinos, race courses and online gaming. What did you recommend?

We explained the practices that are being used across the industry globally. We also discussed the impact of high taxation and the fallout that may occur due to it. We recommended a 28 per cent tax on the GGR.

How do you look at the Centre's participation in the industry?

At the Centre, there is a clear understanding that there need to be separate legal provisions for games of skill. They understand that it is legal and thus there need to be clear regulations.

Additionally, the government came out with very clear guidelines on advertising and there was a list of companies that were blocked. Action is being taken. Especially in the last 2-3 months, the government has taken several actions to ensure that illegal companies do not operate in India.

What is the online gaming industry's outlook for 2023?

The industry is quite positive in terms of revenue growth as long as there is no extreme regulatory action. If there is a stable regulatory environment, the industry will continue to grow at 35-28 per cent CAGR. India is one per cent of the global market in terms of revenue, it has a tremendous upside.

Are you supportive of the regulations?

Regulations are a win-win for everyone. The player is better protected, the industry gets a clear roadmap, the investors have clarity and for the government, it will generate a lot of revenue.

How will 5G impact the online gaming industry?

In India, the cost of data will be the most critical factor. If the cost is affordable, Indians will be ready to compromise on the quality a bit for gaming. But for the mid and senior-range players who play high graphics, high requirements games, there will be a tremendous improvement once 5G comes. They will be able to play games in real time without buffering and with richer graphics.