India’s Online Gaming Sector Expected to Hit $60 Billion by 2034

This reflects the tremendous confidence global investors have in India's rapidly growing gaming market, which is going to be a $60 billion opportunity by 2034, opines Dr. Mukesh Aghi, President and CEO, United States India Strategic Partnership Forum (USISPF).

The report said that the country's online gaming sector- currently worth $3.1 billion-will likely soar exponentially to a size of $60 billion by 2034 amid challenges to regulation and taxation. The US has dominated India's gaming sector single-handedly, with a sum of $1.7 billion out of the total $2.5 billion in direct foreign investment made by it.

This reflects the tremendous confidence global investors have in India's rapidly growing gaming market, which is going to be a $60 billion opportunity by 2034, opines Dr. Mukesh Aghi, President and CEO, United States India Strategic Partnership Forum (USISPF).

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In fact, 90 per cent of this FDI is in the pay-to-play segment which also accounts for 85 per cent of the sector's overall valuation.

Challenges still exist with hassle in regulation and taxation. India remains notable for the highest tax rate, including GST of 28 per cent, levied across all formats based on total deposits of players, according to the USISPF and TMT Law Practice report.

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Based on this, the report noted that the United Nations Central Product Classification classified online gaming as a different activity from online gambling, which happens to be the basis for taxation in domestic jurisdictions across the globe.

With a large consumer base of over 600 million gamers, this space is rapidly being monetized and presents a large export opportunity. However, for Indian companies to compete on the world stage, we need a level-playing field with progressive tax and regulatory policies that align with international standards, said Aghi.

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The report analyzed the regulatory frameworks and taxation policies in 12 key gaming markets. The important finding here is that all of the 12 countries have implemented a separate legal definition for games of chance so that there is a clear difference from skill gaming formats.

This was an important point, as adopting either the commission collected  as the tax base was crucial not only to prevent unfair taxation but also to prevent the proliferation of unregulated, untaxed illegal offshore markets, which could undermine viability in the industry and government revenue.

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A more complex regulatory and tax regime, like the global markets, would not just bring clarity to the sector but would also sustain growth for online gaming, said Abhishek Malhotra, partner, TMT Law Practice.

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