India’s Growing Computer Gaming Industry Is Divided By A New Tax

Charanjot Singh is a professional football player, but he doesn’t go around on a pitch while sporting a pair of boots. Mr. Singh, who comes from the northern Indian city of Chandigarh, represents a nation that increasingly enjoys computer gaming.

Instead, the 20-year-old does a job playing football video games on computers, including in competitions run by Fifa’s division of electronic sports (esports).

Mr. Singh represented India in the Nations Cup 2023 of Fifa Esports back in June. Mr. Singh claims he placed 64th in this contest, which was held in Saudi Arabia. This reportedly won him $10,000 (£8,000), according to one report.

I don’t know if I’m any good, I just like playing, he says.

According to research published in April by the accounting firm Ernst & Young, 421 million individuals in India played online games last year. The number is anticipated to increase to 442 million this year, up from 300 million in 2019.

According to the analysis, total online game revenues in India reached 135 billion Indian rupees ($1.6 billion; £1.30 billion) in 2022, a 22% increase from 2021. It also implied that annual growth would stay at roughly this level.

At the same time, different research said that from 150,000 in 2021 to 600,000 in 2022, Indians taking part in organized esports events had increased dramatically.

90% of Indian gamers use their phones rather than a computer or gaming console, according to reports, and this significant development is thought to have been fueled by the coronavirus lockdowns that gave people more free time as well as the growing availability of inexpensive cell phones and cheap internet data packs.

Even while just 20% of online games now played in India are thought to be produced by local companies, the domestic market has been expanding significantly in recent years. Additionally, there are currently around 900 Indian gaming start-ups.

Even if everything had been going well, the government’s announcement in July that it would impose a new 28% tax on online gambling sent shockwaves across the sector. The wording was so ambiguous that there was concern that it might apply to all Indian gambling companies.

New Delhi later clarified, however, that the levy, which goes into effect next month, will only apply to so-called “iGaming.” These are gaming platforms like internet casinos, or “real money” games that require payment from the players.

Esports tournaments, which are categorized as real sports, are exempt from the tax. Additionally, even though some competitions include prize money, participation is free. Instead, sponsorship and spectator fees are used to pay for the prizes.

The new tax does not apply to casual games, such as those where the player may have to pay to play or make in-app purchases in order to proceed. This is due to the lack of prize money in these games.

While this is going on, some observers claim that haphazard regulation and the fact that laws might vary between Indian states are still issues.

Anusha Ganapathi is a data analyst from Chennai whose love of gaming dates back to her teenage years. She claims that instead of creating more multiplayer shooting games, India’s in-house game developers need to create more games that appeal to families and women. Currently, 40% of Indian gamers are women.