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Of Taxation & Classification, Here’s What Gaming Industry Expects From Upcoming Union Budget 2024

As Finance Minister Nirmala Sitharaman is set to present the full Union Budget 2024 of the Modi 3.0 government in the Lok Sabha on July 23, industry leaders have pinned high hopes on the budget. They are advocating for long-term clarity and a progressive taxation regime for the skill gaming industry. Additionally, they anticipate substantial budgetary allocations under the AVGC fund, in line with the recommendations of the AVGC Task Force.

| Published on July 11, 2024

Here’s The Gaming Industry's Wishlist For The Upcoming Budget

Following the interim budget presented in February, Finance Minister Nirmala Sitharaman is set to unveil the Union Budget 2024 of the Modi 3.0 government in the Lok Sabha on July 23. The Budget session, set to run from July 22 to August 12, has generated optimism within the esports and gaming industry for the year ahead.

Industry leaders are advocating for long-term clarity and a progressive taxation regime for the skill gaming industry. They are also anticipating substantial budgetary allocations under the AVGC fund, in line with the recommendations of the AVGC Task Force.

They also believe that the ease of doing business, regulatory predictability, and tax clarity are crucial for the growth of the startup ecosystem. Initiatives promoting skill development and fostering innovation in the gaming sector are essential for enabling India to become a global hub for gaming talent and technology.

Recently, a consortium of 70 gaming studios and esports companies wrote a letter to Prime Minister Narendra Modi, urging for a clear distinction between traditional video games and real-money gaming (RMG) platforms.

This move follows increased regulatory scrutiny by the government on RMG companies and fantasy sports startups.

The consortium has also requested that the government reduce the GST on video games from 18% to 12%. Additionally, it is advocating for corporate tax holidays to attract investments and support the industry’s sustainability.

Roland Landers, CEO, All India Gaming Federation (AIGF)
Roland Landers

Roland Landers, CEO, All India Gaming Federation (AIGF) underscored that AIGF is determined to implement Prime Minister Narendra Modi vision for the online gaming sector through the continued expansion and transformation of this industry in India.

“To make India a game development hub and take “Make in India” games to the world, we look forward to substantial budgetary allocations being made under the AVGC fund which are aligned with the recommendations of the AVGC Task Force. There is also a need to institute and promote skill building and educational programmes which will nurture the next generation of game developers and professionals,” Landers said.

“Additionally, we anticipate long-term clarity and a progressive taxation regime for the skill gaming industry. A clarity on the GST will help drive the next phase of growth, provide a conducive business environment and also revive investor confidence in the sector. These moves will make gaming a cornerstone of digital India and be the catalyst for India to achieve its goal of a trillion-dollar digital economy,” he added.

Akshat Rathee, Co-founder and MD of NODWIN Gaming
Akshat Rathee

Similarly, Akshat Rathee, Co-founder and MD of NODWIN Gaming, highlighted that gaming and esports have different needs and demands in the budget. With esports now under national and international sports federations, esports would benefit from an increased investment in the sports budget and inclusion in national games such as Khelo India.

“Esports has the potential of winning India medals in international sports competitions. Gaming would benefit from the allocation of budgets for centres of excellence under the AVGC policy of India where game development and associated businesses can create jobs and increase India’s soft power in content for the youth worldwide,” he added.

Anurag Choudhary, Founder and CEO, Felicity Games
Anurag Choudhary

Anurag Choudhary, Founder and CEO, Felicity Games, said, “In countries like Turkey and Vietnam, the non-RMG casual gaming sector has significantly boosted the local economy through overseas revenue inflow and job creation. We hope the upcoming budget will recognize this potential and introduce measures to support game development, infrastructure, and talent development. Tax incentives for developers, investment in skilling infrastructure, and fostering local ecosystems of game development through the establishment of hubs can give India a winning chance to emerge as a global gaming leader.”

“As an Indian casual gaming studio building for a global audience, we need to tailor user experiences for each country and region while navigating taxation and cross-border legal contracts. This is very different from an RMG company operating in India for an Indian user base. Thus, regulations and policies need to differ for both industries, with the government providing incentives to Indian casual gaming studios to enhance global competitiveness,” he added.

Paavan Nanda, Co-founder, WinZO
Paavan Nanda

Paavan Nanda, Co-founder, WinZO, emphasised that the 400% hike in GST has posed unprecedented challenges and existential crisis for the gaming industry. Companies are struggling to retain gamers, leading to widespread consolidation and pushing startups out of the ecosystem.

Nanda pointed out that many startups have already shut down, laid off hundreds of employees, and are grappling with stagnant revenues. The sector, which previously absorbed 90% of the $3 billion FDI in gaming, has seen a complete withdrawal of investments. Apart from a few large-scale operators, early-stage and upcoming companies face near-certain extinction.

“Addressing these concerns will help the gaming industry thrive and contribute significantly to India’s economy. We have urged the government to levy GST on GGR/Platform fees, which is the actual revenue received by a platform. This approach will ensure the sector’s viability and fosters growth. We are confident that the Government will consider our concerns and provide this sunrise sector much needed relief,” Nanda said.

“Tax clarity and viability are crucial for the skill gaming industry. Ease of doing business, predictability in the regulatory environment, and tax clarity are vital for the growth of the startup ecosystem. These startups can grow and mature to IPO and have immense potential to create numerous decacorns and unicorns, driving innovation, job creation, and substantial value addition to the economy,” he added.

Roby John, CEO and Co-founder of SuperGaming
Roby John

Roby John, CEO and Co-founder of SuperGaming, stated that the video gaming and esports industry holds high expectations for policies that will bolster economic growth and innovation in India. The gaming sector has seen exponential growth, driven by a young, tech-savvy population.

Furthermore he went on to say, “We hope the upcoming budget will recognise this potential and introduce measures that support game development, infrastructure, and talent development. Tax incentives for developers, investment in infrastructure, and support for local studios can position India as a global gaming leader. The gaming community looks forward to a budget that acknowledges our contribution to the economy and supports our growth trajectory.”

Vishal Parekh, Chief Operating Officer, CyberPowerPC India
Vishal Parekh

Meanwhile, Vishal Parekh, Chief Operating Officer, CyberPowerPC India, said, “As we approach the upcoming budget session, there is a tangible sense of anticipation within the tech and video gaming industries of the country. We are optimistic that the government will recognise the potential of this sunrise sector and support its growth. We hope to see policies that encourage domestic manufacturing of gaming hardware, provide incentives for local production, and reduce import duties on essential components. This would ensure that our gamers are equipped with advanced gear.”

He went on to say that the gaming and esports sectors hold immense potential for career opportunities for the youth, which in turn encourages more investments in digital infrastructure, such as faster internet connectivity and wider broadband penetration.

This will be crucial in ensuring that gamers across the country have access to seamless and immersive gaming experiences. The government can further fuel the gaming hardware industry by introducing subsidies for research and development in gaming technology and establishing special economic zones dedicated to the production of PC gaming equipment, he said.

“Additionally, we look forward to initiatives that promote skill development and foster innovation in the gaming sector, enabling India to become a global hub for gaming talent and technology. At CyberPowerPC India, we are committed to delivering cutting-edge gaming solutions. We hope that the forthcoming budget will provide the necessary impetus to drive the gaming industry’s growth further in India, as the gaming sector has been one of the fastest growing sectors in the past 5-7 years in our country,” he added.

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