Potential of Online Skill-Based Gaming

Context

Online skill-based gaming has the potential to harness programming, layout, and storytelling skills to leapfrog India to the top of the tech leaderboard globally.

Key Highlights

• With India’s 650 million smartphone users and a younger population, the country is uniquely located to leverage gaming as a motive force of technological innovation, employment, and financial growth. 
• However, stringent taxation regulations, ambiguous regulatory frameworks, and retrospective taxation needs threaten to stifle the sector’s growth.

Potential of Online Skill-Based Gaming 

• It is one of the most important sunrise sectors of India. The online gaming industry has witnessed exponential growth, with 3 Indian startups accomplishing unicorn status. According to a PwC document, the world:
  • Accounted for ₹33,000 crore in 2023.
  • It is projected to double to ₹66,000 crore through 2028, growing at a CAGR of 14.5%.
  • Could generate 2-3 lakh more direct and indirect jobs, on top of the 2 lakh present jobs inside the industry.

Why Online Gaming Matters for India’s Tech Ecosystem?

• Fostering Talent: The quarter harnesses capabilities in programming, design, and storytelling, growing a multi-disciplinary innovation hub.
• Boosting Exports: India can emerge as a global exporter of recreation improvement, animation, and AR/VR technologies.
• Startups & Investment Growth: The gaming ecosystem is attracting venture capital and global investment, in addition strengthening India’s digital financial system.

Regulatory Challenges Hindering Growth

• Excessive Taxation and Retrospective GST Demand: The Supreme Court’s 2025 live order at the Union government’s ₹1.12 lakh crore retrospective GST demand highlighted how excessive taxation threatens industry survival.
  • Online gaming is taxed at 28% GST, a rate similar to playing, liquor, and tobacco.
  • Smaller startups battle to comply with such taxation, risking bankruptcies and shutdowns.
• Conflation with Gambling and Betting: Some State governments imposed bans on online gaming, classifying them as gambling.
  • Courts later overturned these bans, spotting that “video games of skill” are criminal and distinct from gambling.
  • However, misconceptions about gaming persist, affecting regulatory clarity.
• Risk of Illegal Offshore Gaming Sites: Excessive taxation can power customers closer to unregulated playing sites, which perform offshore past Indian regulatory reach.
  • Such systems pose national security and monetary risks at the same time as depriving the Indian economic system of legitimate tax revenues.
• Societal Concerns: Families and regulators are involved about gaming dependency and excessive display screen time.

Need for a Balanced Regulatory Approach

• • Rationalizing Taxes: Online gaming have to not be taxed at par with playing, liquor, and tobacco.
    • A differentiated tax form should be brought, spotting gaming as a leisure and skill- based industry in place of a vice.
  • Developing a Transparent Regulatory Framework: A country wide coverage framework should be crafted in collaboration with industry stakeholders.

• Policies must cope with:

• • Skill-based gaming vs. Gambling difference
  • Consumer protection measures (age regulations, self-exclusion options)
  • Data privacy and security policies
• Encouraging Investment in Gaming R&D: Incentives for game development startups to create Indian-beginning video games with cultural and educational cost.
  • Establish gaming incubators and studies hubs to promote innovation in AR, VR, and AI-based gaming.
• Strengthening Consumer Awareness: Gaming structures need to self-alter to discover complicated behavior and promote accountable gaming.

Source: The Hindu

UPSC Prelims Practice Question

Q. Which of the following is/are the aim/aims of “Digital India” Plan of the Government of India? (2018)

1. Formation of India’s own Internet companies like China did.
2. Establish a policy framework to encourage overseas multinational corporations that collect Big Data to build their large data centers within our national geographical boundaries.
3. Connect many of our villages to the Internet and bring Wi-Fi to many of our schools, public places and major tourist centers.

Select the correct answer using the code given below:

(a) 1 and 2 only

(b) 3 only

(c) 2 and 3 only

(d) 1, 2 and 3

Ans: (b)

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