Budget 2023: What gaming firms want from FM Sitharaman

(Representational image: Priyam Raj via Unsplash)

Indian gaming companies and industry associations have sought a clear and consistent tax regime in the Budget 2023-24 to boost the sector’s burgeoning growth.

"The sector is poised to offer over 2 lakh direct and indirect jobs in coming years and contribute over Rs 60,000 crore in tax revenue to the government by 2025. Considering the substantial potential that this industry holds, a well clarified taxation regime would provide an immense boost to this sunrise sector," said Roland Landers, Chief Executive Officer of the All India Gaming Federation.

Nazara Technologies CEO Nitish Mittersain has sought incentives for game developers generating export revenue, citing India’s potential to become a global powerhouse for game development.

In December, Moneycontrol reported that Indian gaming studios had started attempting ambitious projects towards creating original Intellectual Property (IP) video games based on the Indian cultural ethos, as consumers warm up to spending money on mobile games.

Production fund, ‘Çreate in India’

On December 26, a task force on Animation, Visual Effects, Gaming and Comic (AVGC) that was formed by the government in April last, recommended establishing a dedicated production fund for domestic content creation to promote Indian culture and heritage globally.

It also recommended launching a ‘Create in India’ campaign with a focus on content creation in India.

"Access to financial support, as envisaged under this fund, will be a tremendous boost to young, talented developers and designers, and will accelerate the push to ‘Create in India’ and take made-in-India games to the world" said Sai Srinivas, CEO of skill-gaming unicorn Mobile Premier League (MPL).

"We believe that India’s online gaming industry can truly lead the charge in the global digital economy and a uniform, progressive policy can be the wind in its sails," Srinivas said.

India-made IP, Gen Z

Rahul Tewari, Chief Financial Officer, Games24x7, said the Indian gaming industry can provide opportunities to harness domestic talent, support allied industries and export Indian-made Intellectual Property to the global gaming market, contributing significantly to the country’s potential of becoming the world’s third-largest economy by 2030.

"At this critical juncture in the growth of the industry, we eagerly look forward to favourable economic policies and consistency in taxation from the upcoming budget, which will allow the industry to sustain itself while comprehensive regulatory policy frameworks are put in place," he said.

JetSynthesys founder Rajan Navani sought a progressive budget that would resonate with the country's Gen Z citizens, who will not only be the largest consumer base over the next decade but also add up to over 27 percent of the country's workforce by 2030.

"With 2023 anticipated to be another high-growth year for gaming and esports, we are expecting a positive budget with concerted initiatives to help the sector across verticals. We are looking forward to progressive regulations and policies, infrastructural improvements, awareness campaigns, tournaments and competitions, training facilities, greater investments and much more," he said.

These comments come less than a month after the government designated the Ministry of Electronics and Information Technology (MeitY) as the nodal ministry for all online gaming related matters. It also officially recognised Esports as a multi-sport event and will be under the Ministry of Youth Affairs and Sports.

MeitY subsequently released proposed new rules as draft amendments to the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 and is sought public comments until January 25, 2023.

Read: Draft rules | Don't keep video games, real-money ones under same regulatory purview: Gaming studios tell MeitY

GST, TDS

WinZO co-founder Paavan Nanda said a continuation of the current Goods and Services Tax (GST) slab and Tax Deducted at Source (TDS) threshold; any sharp increase in tax will deter growth, sink early-stage startups further into losses and make the industry unviable.

At present, gaming companies are required to deduct TDS at the rate of 0.1 percent for winnings of over Rs 10,000 while gross winnings from online gaming are taxed at a flat rate of 30 percent. The government is reportedly considering stricter TDS norms by expanding its scope to winnings below Rs 10,000 besides a higher GST rate of 28 percent.

"The increase in GST and TDS cumulatively would completely wipe out the homegrown industry that has the potential to be the largest next generation of exports of consumer tech products made in India for the world," Nanda said.

Esports

Esports firms have sought increased budget allocation to support the next phase of growth of the segment as well as training of athletes.

Vinod Tiwari, President of the Esports Federation of India, said the government should consider setting up an Esports Development Fund that is similar to the ones in countries like Malaysia and Korea.

"Our players need facilities/training centres, advanced gears, boot camps and coaching to be set, we need to provide the top coaches, and other facilities to ensure they get complete support and can perform their best," he said.

Revenant Esports CEO Rohit N Jagasia said he also hopes that the prize pool winnings of esports athletes are exempted from income tax just like any other sportsperson.

Other demands include import duty relaxations on gaming hardware or a bigger focus on the 'Make In India' initiative.