The online gaming segment in India has seen remarkable growth with immense economic potential. According to EY-FICCI’s new frontiers navigating the evolving landscape for online gaming in India report, the country boasts a substantial gaming community, comprising 42.5 crore gamers, the second largest globally after China. Additionally, the sector holds the potential to boost foreign direct investment (FDI) inflows, employment and investments in various sectors. It will also catalyse ancillary sectors like fintech, cloud services, data analytics, and cybersecurity.
The report further unveils that from FY20 to FY23, the online gaming segment in India experienced a notable compound annual growth rate (CAGR) of 28% culminating in a market size of Rs 16,428 crore in FY23. However, industry estimates suggest it will reach Rs 33,243 crore in FY28, showing a 15% CAGR. Thus, the segment has attracted consistent investments totalling Rs 22,931 crore between FY20 and FY24 YTD from both domestic and foreign sources. Furthermore, it directly and indirectly employs around one lakh individuals, with the prospect of expanding to 2,50,000 job opportunities by 2025.
Moreover, the real money gaming (RMG) sub-segment constitutes a substantial part of the online gaming ecosystem, comprising 82.8% of the market share in FY23, with more than 400 RMG start-ups. Additionally, the industry estimates this sub-segment to contribute around Rs 6,500-6,800 crore as direct tax revenues (comprising TDS and corporate tax), and Rs 75,000-76,000 crore as indirect tax revenue (GST) to the exchequer during FY24−28E.
Furthermore, the report suggests that the Intermediary Guidelines and Digital Media Ethics Code Rules, 2021 (online gaming rules) for online gaming issued by the Ministry of Electronics and Information Technology (MeitY) is perceived by the industry as progressive. These guidelines aim to remove ambiguity, bolster investor sentiment, attract funding and encourage innovations in India’s digital economy while prioritising user safety. During the 50th GST Council meeting, the Group of Ministers (GoM) suggested increasing the tax rate on online gaming to 28%.
Further, due to a lack of consensus on the valuation base, the final decision on this was left at the behest of the GST Council. Consequently, in the 51st GST Council, decisions on implementation of increased rate and value along with the proposed changes in the GST law were finalised. Measures such as raising awareness, setting limits based on various factors, implementing age restrictions, and other strategies would be more effective in addressing addiction.
This report presents an overview of the online gaming segment in India, encompassing its influence on the Indian economy. Further, it delves into the regulatory framework – MeiTY regulations, GST changes and the strategic endeavours for ensuring the segment’s sustained growth.