Business Standard

Online gaming can help India's development goals, needs clear regulations

The sunrise sector must be integrated into national development goal and strategies

Online Gaming

This vision encompasses not just technological advancement but also the creation of a robust, resilient economy | File image

Dhanendra Kumar
We are in the era of Amrit Kaal. As the country gallops towards its ambitious goal to be Viksit Bharat by 2047, it is imperative that all sectors of economy take a fresh look on their roles in the saddle in this transformative journey. Online gaming, which is a sunrise sector in digital economy, is poised to play an important role in this quest.

India has the world’s largest population with 1.425 billion people. India also has the second highest number of online gamers in the world with 425 million people. With largest number of young people, it has the potential to become the global gaming powerhouse, contingent upon creating an enabling ecosystem with suitable regulatory framework, designed for market access, consumer protection, and responsible gaming.

India has already laid the enabling digital environment with JAM trinity (Jan Dhan-Aadhaar-Mobile linking Jan Dhan accounts, mobile numbers, and Aadhaar cards), with measures for financial inclusion and safety of online transactions, Goods and Services Tax (GST) unifying complex tax structure and laws for data protection, privacy and security. India's progress toward becoming a $30 trillion economy will be a historic narrative for future generations: A testament of the country’s resilience, innovation, and indomitable entrepreneurial spirit. According to Niti Aayog estimates, India has to maintain a gross domestic product growth rate of around 9 per cent each year, alongside a per capita income of $18,000-$20,000 over the next two decades. This is achievable.

This vision encompasses not just technological advancement but also the creation of a robust, resilient economy. For India to emerge as the third-largest economy in the world, it requires the collective effort and growth of both its traditional sectors and newer, innovative industries.

Furthermore, achieving this goal necessitates the creation of an environment conducive to business growth across all segments of economy. This includes fostering a landscape where ease of doing business is a given, and where industries aim at creating new jobs, enhance operational efficiencies and generate exports.

The story of India’s online gaming industry is a narrative of resilience and innovation. Amidst significant challenges, such as the imposition of a 28 per cent GST on their deposits, the sector demonstrated remarkable adaptability. This regulatory challenge had initially threatened the very viability of many companies, leading to layoffs and the closure of some of the smaller firms. However, the industry’s response showcased the tenacity and inventive spirit of India’s entrepreneurs. Through operational optimisations and technological innovations, companies not only absorbed the increased costs but also prevented these from being passed on to consumers. This phase of adversity underscored the industry’s capability to pivot and innovate under pressure.

This resilience paid off significantly. Six months following the GST adjustment, the industry’s revenue contribution to the government surged nearly six times, surpassing many traditional industries in terms of tax revenue growth. A 475 per cent growth in revenue meant an infusion of about Rs 3,470 crore in the government’s coffers in just the first three months post-implementation, with expectations of annual tax revenues from online gaming reaching Rs. 13,000 crore to Rs 14,000 crore.

The figures underline the substantial potential of online gaming in generating revenue for the exchequer and also its inherent substantive potential. The synergy between online gaming and technological innovations like artificial intelligence, virtual reality, and blockchain can open doors for the country for jobs and being a leader in digital innovation. In fact, it can create employment in ancillary industries like cybersecurity, customer service, digital payments and marketing and advertising.

The online gaming sector, which employs around 100,000 people, is expected to increase the number to 250,000 in the next three to five years. This growth is a testament to the sector’s robustness and its potential to boost employment and promote digital skilling among the youth.

India’s distinct advantage, stemming from its young demographic, technological prowess, and rapidly expanding digital infrastructure - positions it as a fertile ground for innovation in gaming. By encouraging this ecosystem, India can attract global investments, enhance India’s soft power through cultural exports in contemporary gaming content, and set global standards in digital entertainment.

The full potential in online gaming in India is still curtailed by lack of cohesive regulatory framework, an issue that needs urgent addressing to safeguard players, ensure fair play, and foster innovation and investment. The industry is currently grappling with numerous litigations that are awaiting resolution at the Supreme Court. Additionally, there is a noticeable disparity between central and state regulations, leading to inconsistent state policies that directly affect the business operations and continuity.

India can learn from international frameworks, like the United Kingdom’s national self-exclusion scheme (GAMSTOP) and other measures that empower players to manage their gaming habits. Singapore’s integrated and centralised regulatory approach helps regulating content and ensuring social welfare of its player. There are stringent advertising guidelines in Sweden, a model which could be customized to suit India’s socio-cultural ethos. According to media reports, India's Ministry of Electronics and Information Technology has been looking at an independent regulator that will allow only registered entities to offer e-gaming services in India.

As we envision a Viksit Bharat by 2047, integrating online gaming into this dream is not just strategic but essential. With careful planning, clear and progressive policy frameworks, and collaborative efforts with stakeholders, the online gaming industry can transform into a cornerstone of India’ success. It’s an opportunity to not only achieve our economic and digital ambitions but also set a global benchmark in leveraging gaming for national development.

As we move forward, the integration of this sunrise sector into our national development goal and strategies will undoubtedly play a pivotal role in shaping a prosperous, digitally empowered India by 2047.

The writer has been executive director at the World Bank for India, Sri Lanka, Bangladesh and Bhutan, first chairman of the Competition Commission of India, and secretary to the government of India. He is the founding chairman of Competition Advisory Services LLP.

These are the personal opinions of the writer. They do not necessarily reflect the views of or the 'Business Standard' newspaper

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First Published: Mar 29 2024 | 2:35 PM IST

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