New Delhi, October 14: India's online gaming sector, currently valued at $3.1 billion, has the potential to expand to a staggering $60 billion by 2034 amid challenges surrounding regulation and taxation, a report showed on Monday. The US has been a significant contributor to India's gaming sector, with $1.7 billion out of the total $2.5 billion in foreign direct investment (FDI) coming from the US alone.

“This reflects the immense confidence global investors have in India’s rapidly growing gaming market, which is projected to become a $60 billion opportunity by 2034,” according to Dr Mukesh Aghi, President and CEO, United States India Strategic Partnership Forum (USISPF). Indian Video Game Developer SuperGaming To Launch ‘Indus Battle Royale’ Game for Android and iOS on October 16; Check Details (Watch Trailer).

Notably, 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. However, challenges surrounding regulation and taxation persist. India stands out for its high tax rate, imposing a 28 per cent Goods and Services Tax (GST) for all formats on the total deposits made by players, according to the report by USISPF and TMT Law Practice.

The report also highlighted that the United Nations Central Product Classification (UN CPC), which forms the basis for taxation in domestic jurisdictions globally, defines online gaming separately from online gambling. “With a large consumer base of over 600 million gamers, this space is rapidly being monetised and presents a substantial export opportunity. However, for Indian companies to compete on a global stage, we need a level playing field with progressive tax and regulatory policies that align with international standards,” said Aghi.

The report looked at the regulatory frameworks and taxation policies in 12 key gaming market. It revealed that all 12 countries have a separate legal definition for games of chance, ensuring a clear distinction from skill gaming formats. It emphasised that adopting platform revenue or the commission collected as the tax base is crucial not only for ensuring fair taxation but also for preventing the proliferation of unregulated, untaxed illegal offshore markets that could undermine both industry viability and government revenue. Game Freak Data Breach: Pokémon Developer Hacked, Leaking Upcoming Games Titles and Nintendo Switch 2 Details.

“A more nuanced regulatory and taxation regime, similar to those adopted in global markets, would not only provide clarity but also foster sustainable growth in the online gaming sector,” said Abhishek Malhotra, partner, TMT Law Practice.

(The above story first appeared on LatestLY on Oct 14, 2024 01:01 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).