The Indian gaming industry, which is made up of more than 900 small and mid-sized gaming companies, could experience a shake-up soon if the government continues with its anti-business policies and heavy taxation, Roland Landers, CEO, AIGF said.

The industry apex body claims that there are currently more than 900 gaming companies in the country, the majority of which are in the MSME segment. With an increase of more than 400% in the GST liability, a large number of entrepreneurs and start-ups who have innovated in the gaming sector will be disproportionately affected and may even close their doors.

“It may be noted that since the tax hike, multiple companies have announced their closure or widespread layoffs. We fear this trend will only increase in the coming months,” Mr Roland Landers expressed his apprehension.

Explaining several challenges faced by gaming players as the amendments were recently announced and the new tax regime is set to be implemented from October 1st. He said the industry has less than a month to make the necessary changes to the GST regime and there are still rules that need to be notified.

“The companies will have to make several changes at an operational level, including changes to their product on the technical side and adjustments in their long-term financial commitments on the business side, to fit into the new regime. These changes would involve a significant overhaul and restructuring of the business across the online gaming industry as well as the allied service industries,” he explained.

Start-ups and MSMEs will be hit particularly hard and we hope the government allows enough time for industry to adapt to the new regime as Mr. Landers suggests.

Underlining the business risks associated with the current situation, he said that there is a possibility that Indian online gamers might not be able to cope with the increased playing costs and shift to offshore platforms. It was clear that these platforms are trying to move quickly to the Indian audience, which may not be able to sustain the increased playing cost due to the hike in GST burden.

Mr Landers further said, “We have noted that several offshore online betting and gambling platforms are illegally offering their services within India. Several such platforms have begun to aggressively advertise their services in the aftermath of the announcement of the GST Council’s decision to tax the legitimate online gaming industry at the rate of 28%, up from 18% earlier.”

AIGF further cautioned that the current situation could have a detrimental effect on the government’s finances if unlicensed/unregulated platforms offering illegal services were permitted to draw in the Indian public.

In FY2022, India’s online gaming market was valued at $2.6 billion and is projected to reach $5 billion by 2025. The online gaming industry has generated revenue of over Rs 2,000 crore under the GST revenue.

Credit: The Hindu