Meghalaya: SOGI wants balanced regulation for growth of online games industry

A CORRESPONDENT

SHILLONG: Skill Online Games Institute (SOGI), a pioneering institution dedicated to providing comprehensive knowledge and data-driven insights into the online games industry, advocated the cause for a balanced regulation and collaboration to foster the growth of India’s online games industry in Meghalaya today.

Through this, SOGI aims to focus on growth, innovation, and education in the online games sector, tapping into the region's potential and encouraging local talent to thrive in this hyper-digital industry. SOGI is committed to making decisions based on facts, gathered both nationally and internationally to safeguard the influence on the skilled online games industry and avoid emotional or moralistic biases.

In a recent interaction with players, the Prime Minister, Narendra Modi, emphasised the need for the government to understand the online gaming industry and make necessary changes to support its growth. His remarks highlighted the government's recognition of the industry's potential and the importance of creating a supportive regulatory environment.

This vision aligns with the broader goal of positioning India as a global hub for digital entertainment, including online gaming. This vision has led to the positive development of the establishment of the AVGC (Animation, VFX, Gaming, and Comics) taskforce by the Ministry of Information and Broadcasting (MOIB), the identification of the Ministry of Electronics and Information Technology (MeitY) as the nodal ministry, and the introduction of regulatory frameworks through IT Rules.

According to a recent report by Accenture, the global gaming industry surpassed $300 billion in 2021, outstripping the combined markets of the movies and music industries by over three times.

In India, the sector witnessed an impressive compound annual growth rate (CAGR) of 28 percent between FY20 and FY23. The online games industry in India reached a market valuation of Rs 16,000 crore in FY23, with projections to more than double by 2029. The sector has been a major contributor to job creation, technological innovation, and foreign investments, attracting nearly INR 23,000 crore in investments over the past five years and producing three unicorns led by Indian entrepreneurs.

Despite rapid growth, India's online gaming segment contributes a mere 1.1 percent to global online gaming revenue, whereas China contributes 25 percent and the US contributes 23 percent. This disparity indicates substantial untapped potential within the Indian market, which, if harnessed correctly, could elevate India's status in the global gaming industry. This is a borderless industry that is fueled by innovation, and India could easily grow to 5–10 percent because of its natural ability in the field of information technology.

The online games industry in India faces significant challenges, particularly with the recent government regulations imposing a 28% Goods and Services Tax (GST) on full face value for online gaming. This regulatory change has raised concerns among industry stakeholders about its potential impact on the sustainability and growth trajectory of online gaming in the country. Previously, gaming companies were paying a tax of 18% applicable to platform fees.

HUGE POTENTIAL NEEDS TO BE HARNESSED FOR INDIA

Amrit Kiran Singh, Founder President of SOGI, said, “While we celebrate the rapid expansion and the immense potential of the online gaming industry in India, we must also address the hurdles that come with it. The 28 percent GST regulation poses a substantial challenge, impacting the overall profitability and investment in the sector. This will not only stifle the industry’s potential, leading to missed opportunities for economic growth and job creation, but also lead to more offshore, illegal fly-by-night operators. We must work collaboratively with the government to find a balanced approach that supports growth while ensuring fair taxation.” This increase in GST not only puts Indian companies at a huge disadvantage against international competitors, but it also offers the big Indian market of 300 million players to illegal international companies that advertise in India, luring players to come to their platforms and win without paying TDS and GST. This also has huge PMLA (Prevention of Money Laundering Act) implications.

NEGATIVE ASPECTS CAN BE ADEQUATELY ADDRESSED

Amrit believes that the challenges of the online gaming industry, particularly the risk of addiction and concerns under the Prevention of Money Laundering Act, can be mitigated using technology. “Technological solutions can be employed to ‘time out’ players who overindulge and to prevent money laundering. These concrete actions demonstrate the industry's potential to address its challenges effectively. An Indian Council of Medical Research (ICMR)-funded study by AIIMS researchers has shown that gaming disorders can be prevented through digital interventions,” he added.

The Skill Online Games Institute believes that the government and industry need to work in tandem to ensure India harnesses the full potential of this huge industry in terms of creating jobs and contributing to GDP growth while mitigating the negative aspects like addiction through the use of technology and not through increased taxation that hands over the big Indian market to international players by disadvantaging Indian companies.

SOGI has onboarded Yashvardhan Sinha, IFS, a distinguished diplomat and former Chief Information Commissioner of India, to its Advisory Board, along with Shivani Jha, a dynamic tech policy lawyer and the leader of the E-Gamers & Players Welfare Association (EPWA). The latest introduction is Dr. Yatan Pal Singh Balhara who serves as the Secretary General of the World Association on Dual Disorders (WADD) and offers consultancy to esteemed organizations such as the World Health Organization and UNODC.  

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