Online gaming can help India’s development goals and needs clear regulations

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

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

India has already created an enabling digital environment with the JAM trinity (Jan Dhan-Aadhaar-Mobile linking Jan Dhan accounts, mobile numbers and Aadhaar cards), with measures for financial inclusion and security of online transactions, and the Goods and Services Tax (GST) which covers the complex tax structure and data protection, privacy and security laws. India’s progress towards a $30 trillion economy will be a historic story for generations to come: a testament to the country’s resilience, innovation and indomitable entrepreneurial spirit. According to Niti Aayog estimates, India needs to maintain a gross domestic product growth rate of around 9 percent per year over the next 20 years, along with a per capita income of $18,000 to $20,000. This is feasible.

This vision includes not only technological progress, but also the creation of a robust, resilient economy. If India is to emerge as the third largest economy in the world, it will require the collective efforts and growth of both its traditional sectors and newer, innovative industries.

Furthermore, achieving this goal requires creating an environment conducive to business growth in all segments of the economy. This includes fostering a landscape where ease of doing business is a given, and where industries focus on creating new jobs, improving operational efficiency and generating exports.

The story of the Indian online gaming industry is one of resilience and innovation. Amid significant challenges, such as the imposition of a 28 percent VAT on their deposits, the sector showed remarkable adaptability. This regulatory challenge had initially threatened the viability of many businesses, leading to layoffs and the closure of some smaller businesses. However, the industry’s response demonstrated the tenacity and inventive spirit of Indian entrepreneurs. Through operational optimizations and technological innovations, companies have not only absorbed the higher costs, but also prevented them from being passed on to consumers. This phase of adversity underlined the industry’s ability to innovate and innovate under pressure.

This resilience paid off significantly. Six months after the GST adjustment, the sector’s revenue contribution to the government increased nearly six times, surpassing many traditional industries in terms of tax revenue growth. A revenue growth of 475 percent meant an inflow of around Rs 3,470 crore into the government’s coffers in just the first three months of implementation, with annual tax revenue from online gaming expected to reach 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 substantial potential. The synergy between online gaming and technological innovations such as artificial intelligence, virtual reality and blockchain can open doors for the country to jobs and become a leader in digital innovation. It can even create employment in related sectors such as cybersecurity, customer service, digital payments, and marketing and advertising.

The online gaming sector, which employs approximately 100,000 people, is expected to grow this 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 skills among young people.

India’s clear advantage, arising from its young demographic, technological prowess and rapidly growing digital infrastructure, positions the country as a fertile ground for gaming innovation. By fostering this ecosystem, India can attract global investments, increase India’s soft power through cultural exports of contemporary gaming content, and set global standards in digital entertainment.

The full potential of online gaming in India continues to be limited by the lack of a coherent regulatory framework, an issue that needs to be urgently addressed to protect players, ensure fair play and promote innovation and investment. The industry is currently facing numerous lawsuits awaiting resolution in the Supreme Court. Moreover, there is a noticeable difference between central and state regulations, leading to inconsistent state policies that directly impact business operations and continuity.

India can learn from international frameworks such as the United Kingdom National Self-Exclusion Program (GAMSTOP) and other measures that enable players to control their gaming habits. Singapore’s integrated and centralized regulatory approach helps regulate content and ensure player social welfare. There are strict advertising guidelines in Sweden, a model that can be adapted to India’s socio-cultural ethos. According to media reports, India’s Ministry of Electronics and Information Technology has been looking into an independent regulator that would allow only registered entities to offer e-gaming services in India.

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

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

The writer was 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 founder and chairman of Competition Advisory Services LLP.

First print: March 29, 2024 | 2:35 PM IST