A young India with over 1.4 billion people under the age of 40, is demanding growth and change. The government is steering the economy through three key pillars – digital technology, infrastructure and sustainability.
It is from this lens that the recent Ministry of Electronics and Information Technology (MeitY) regulations for online gaming should be viewed. The appointment of MeitY as a nodal ministry and its efforts to regulate online gaming and impose higher due diligence on companies is a boon for the sunrise sector.
It provides an incentive for the industry to grow responsibly, attract more FDI, lead more innovations and play a key role in achieving the vision of creating a $1 trillion digital economy by 2025-26.
unlocking value
The Indian gaming industry is growing at a CAGR of 28-30% and is expected to reach $5 billion by 2025. The country has over 900 gaming companies and over 200 million online gamers, second only to China. The tremendous boom is attributed to affordable smartphones and cheap data rates.
MeitY rules for the online gaming industry, outlining regulatory compliance requirements, and streamlining governance processes will provide further impetus to this emerging sector.
The regulations and consequential recognition for the industry is likely to open up FDI for the sector, which is expected to reach Rs 50,000 crore by 2025.
foundation setting
The rules mandate the setting up of self-regulatory bodies for the online gaming industry, mandatory KYC of players as per RBI norms as well as grievance redressal mechanism. Furthermore, the self-regulatory body has been entrusted with the responsibility of formulating policies that can address risks such as financial loss and user loss. OGI will be mandatorily required to comply with these policies.
Notably, these compliance obligations are in line with best practices adopted around the world. For example, in Sweden, a licensing system for online companies ensures that only legitimate operators offer online gaming services. The Swedish government has introduced measures to prevent addiction, such as self-exclusion and user-imposed deposit limits.
Similarly, in Canada, which is a popular destination for online gaming companies, regulations have been put in place to ensure player safety, fair gaming and responsible gaming. Licensing requirements and player verification processes have been critical to these protocols.
fueling innovation and driving the economy
The regulations will provide clarity and transparency to the online gaming industry, promoting healthy competition and innovation.
With clear guidelines and a supportive regulatory environment, the online gaming sector is expected to attract more investors and companies, thereby creating more jobs and economic growth.
Providing clarity to GST issue
It is expected that this development will also inform the pending decision on the taxation structure of the sector and help the GST Council take a balanced and rational decision for the industry, which will further encourage foreign investment in the sector. Regulatory certainty will also encourage startups to develop new games and innovative technologies, which will further fuel the growth of the industry.
In fact, it will not only help in realizing Prime Minister Shri Narendra Modi’s vision of India becoming a global leader in AVGC, but will also further the vision of Make in India and Atmanirbhar Bharat and encourage more entrants in this sector, Will increase investor confidence, and create new jobs.
Lastly, India is already among the top five global markets for online gaming. India’s proportion of new paying users (NPUs) in the gaming sector grew at the fastest rate in the world, from 40% in 2020 to 50% in 2021. To dominate the global gaming arena.
(An Innovation Studio feature article)
Information is provided for general informational purposes only and should not be relied upon as legal advice