Government looking at 100% FDI in online gaming: Report

The gaming industry has welcomed the potential policy shift, viewing it as a positive step towards opening up new opportunities for investment.

The government is examining a possible 100 percent foreign direct investment (FDI) in the online gaming sector, the Mint reported on July 31. If it goes ahead, the move will provide a much-needed relief to the industry grappling with high tax burdens and regulatory uncertainties.

Discussions are underway at various levels of the government regarding a proposal from the Department for Promotion of Industry and Internal Trade (DPIIT), the report cited sources as saying.

The proposed policy would enable full FDI in online real-money gaming, provided the investments do not involve betting or gambling activities.

Moneycontrol couldn’t verify the report independently.

The change could eliminate the need for official approval under the automatic route, making it easier for startups to attract foreign capital.

"The goal is to simplify the process and support the high-growth gaming sector," an official told Mint. "By clarifying the FDI rules and allowing up to 100 percent investment through the automatic route, we aim to facilitate capital influx into this burgeoning industry."

Though 100 percent FDI in online gaming has not been explicitly banned, the existing regulatory ambiguity has hindered the companies' ability to secure banking and government clearances, deterring potential investors.

A clear policy can revitalize the sector, which primarily generates revenue from real-money games like fantasy sports and rummy. However, the industry has faced challenges related to the classification of these games as skill-based or chance-based.

The proposal aligns with the broader government strategy to liberalise FDI regulations across various sectors.

In the Union Budget presented on July 23, the government pledged to simplify FDI rules and encourage foreign investments, including promoting the use of the rupee in international transactions.

Industry stakeholders have called for further clarification on the types of games permissible under the new FDI framework to fully understand the implications of the proposed changes.

Queries sent to the Ministry of Electronics and Information Technology (MeitY) and DPIIT remained unanswered at press time, the report said.