Indian gaming industry to grow to $8.92 billion in next 5 years: Report

Even as the Indian gaming industry is grappling with the newly implemented 28 per cent goods and service tax (GST), the sector is expected to grow to $8.92 billion in the next five years, according to a recent report.

India’s gaming sector is currently valued at around $3.1 billion, according to industry estimates.

With 442 million gamers, India is the second-largest gaming market in the world behind China. Over the last five years, the Indian gaming sector has raised a total of $2.8 billion from domestic and global investors, with the real money gaming (RMG) segment being one of the chief revenue drivers, the report by Grant Thornton Bharat and the E-Gaming Federation (EGF) said.

The RMG sector continues to account for 83-84 per cent of the revenue, with approximately 100 million online gamers daily, including 90 million paying to play.

This comes at a time when Indian RMG firms are reeling from a 28 per cent blanket tax on online gaming. Skill gaming platforms earlier paid 18 per cent GST on the platform fees, also known as Gross Gaming Revenue (GGR). The new rules, which do not make a distinction between games of skill or chance, came into effect on October 1, 2023.

“PE/VCs are seeking early mover advantages, with specialised VC funds like Lumikai and Centre Court Capital focusing on gaming, sports tech, and interactive media. Large PE funds are also investing in this space, indicating a likely increase in deal activity,” said Vishal Agarwal, Partner, Private Equity Group and Deals Tax Advisory Leader Grant Thornton Bharat.

“However, gaps remain, necessitating a robust, clear regulatory landscape to support growth. Investors need careful diligence and structuring to address tax risks and comply with laws when investing in Indian gaming companies,” he added.

The report called for a detailed code of conduct in the gaming industry which would define ethical standards to ensure accountability and transparency.

It said the code of conduct would tackle major risks, including cyber threats, regulatory uncertainties, and financial risks, mandating best practices to address these challenges and support the industry’s sustainability and growth.

The report further outlined a need for third-party certification to encourage self-regulation and uphold industry standards.

GAME ON

- India 2nd-largest gaming market with 442 mn gamers, after China
 

- Raised $2.8 bn in 5 years from global investors
 

- Real-money gaming: 83-84% revenue, 100 mn daily gamers (90 mn paying)
 

- Game downloads soared from 5.65 bn to 9.5 bn
 

- India: 16% of global game downloads
 

- 15,000 game developers and programmers in India
 

- Mobile gaming: 90% of online market