Indian video game companies have long faced challenges due to the lack of clear definitions and distinctions between their industry and real money gaming. However, a coalition of over 70 video game companies in India is now urging the government to address this issue and create a clear differentiation.
The coalition, which includes companies like Gmonks, Newgen, Lila Games, Dot9 Games, and the Esports Federation of India, recently sent a letter to Prime Minister Narendra Modi and the Ministry of Information and Broadcasting. In the letter, they requested the government to abandon the umbrella term “online games” and instead use distinct categories: “video games” and “real money games.”
The push for clear definitions comes after recent tax amendments that placed real money games in a higher tax bracket (28%) compared to video games (18%). This lack of differentiation has resulted in unintended consequences for video game companies, including multiple show cause notices, tax raids, and denial of services by banks and payment gateway companies.
The confusion between video games and real money games has even led to local police raiding video game parlors, mistaking them for gambling establishments. This has not only caused difficulties for video game companies but also complicated dealings with international investors.
Another factor contributing to the need for distinction is the dominance of fantasy sports startups, which often overshadow the traditional video gaming sector. Lawmakers tend to focus on the concerns and policy proposals of these startups, neglecting the legitimate concerns of video game companies.
To address these issues, the coalition is calling for clear definitions in Indian policy frameworks. They define video games as digital entertainment products played purely for leisure or learning without monetary staking. Real money games, on the other hand, involve users staking money to enter contests with the potential to win or lose real currency.
Additionally, the coalition is requesting that media outlets refrain from using images of video games when reporting on real money games or gambling to avoid public misconceptions. They believe that for the video game industry to grow, it must be well-accepted and celebrated by the general public.
In a broader regulatory context, the coalition is advocating for the Ministry of Information and Broadcasting to be designated as their nodal agency, aligning them more closely with other entertainment and media verticals. This would help address the underdeveloped state of the video game industry in India.
The coalition has also proposed other initiatives, such as establishing a Catalyst Fund to provide financial backing to startups and small businesses, encouraging banks to recognize digital intellectual property as collateral for loans, and improving higher education in game development. They are also seeking a reduction in GST on video games from 18% to 12% and corporate tax holidays to attract investments and support the industry’s sustainability.
Overall, the coalition’s efforts to create clear distinctions between video games and real money games in India are crucial for the growth and recognition of the video game industry. By addressing these challenges and advocating for supportive policies, they aim to bolster the sector’s development and attract more investments.
