SOGI aims to address challenges amidst growth and the impact of 28% GST on India’s online games industry
Ahmedabad 03 September 2024 – The Skill Online Games Institute (SOGI), a leading institution focused on advancing knowledge and data-driven insights for the online games industry, is advocating for balanced regulation to drive growth in India’s booming gaming sector. SOGI aims to harness the region’s potential and nurture local talent to thrive in this rapidly evolving digital industry.
According to The State of India Gaming Report FY23 by Lumikai and Google, the Indian gaming industry generated $3.1 billion in FY23 and is projected to reach $7.5 billion by FY28, growing at a CAGR of 20%. Despite this rapid expansion, SOGI Research shows that India’s online gaming segment contributes just about 1% to global gaming revenues, compared to 25% from China and 23% from the U.S. This highlights the immense untapped potential within the Indian market, which could elevate India’s status globally, if harnessed effectively.
SOGI’s research shows that 78% of time spent by Indian gamers is on foreign-backed platforms, allowing foreign companies to profit from Indian consumption. Specifically in Ahmedabad, foreign backed platforms dominate the market with over 90% of total gameplay, indicating the unfavourable hegemony of international firms. This dominance points to missed opportunities for homegrown innovation and cultural representation in gaming. To empower Indian start-ups and level the playing field, SOGI advocates for supportive policies, fiscal incentives, and strategic investments.
The escalation of 28% GST on the full face value of online gaming has driven users towards offshore, illegal gambling platforms. These companies, advertising as “No-GST” platforms, have seen a 35% growth in Indian users since October 2023. Annualized, this represents a 57% increase in illegal activity, which, according to Lt. Gen. Vinod G. Khandare, former Director-General of Defense Intelligence Agency, poses a “grave threat to India’s national security.”
Harnessing India’s Potential
Amrit Kiran Singh, Founder President of SOGI, stated, “While the Indian gaming industry has immense potential, the 28% GST regulation significantly impacts profitability, investment, and innovation. This stifles the industry’s growth, leading to missed opportunities for economic expansion and job creation, while encouraging offshore illegal operators. We must collaborate with the government to find a balanced approach that supports growth and fair taxation.”
The higher GST disadvantages Indian companies against international competitors, allowing illegal platforms to lure Indian players with promises of tax-free winnings. This also raises serious concerns under the Prevention of Money Laundering Act (PMLA).
Addressing the Challenges
Amrit Kiran Singh believes technology can mitigate the risks associated with the online gaming industry, such as addiction and money laundering. “Digital interventions can help prevent gaming disorders, as evidenced by an Indian Council of Medical Research (ICMR) funded study by AIIMS researchers. We can use technology to time out players who overindulge and curb money laundering. These steps show the industry’s commitment to addressing its challenges responsibly.”
SOGI advocates for collaboration between the government and industry to unlock India’s gaming potential, create jobs, and drive GDP growth, while addressing challenges like addiction through technology rather than increased taxation.
SOGI’s Advisory Board includes Yashvardhan Sinha, IFS, a distinguished diplomat and former Chief Information Commissioner of India; Dr. Yatan Pal Singh Balhara, Secretary General of the World Association on Dual Disorders (WADD) and consultant to the World Health Organization and UNODC; and Shivani Jha, tech policy lawyer and leader of the E-Gamers & Players Welfare Association (EPWA).
