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MeitY to be the nodal ministry for India's online gaming sector

This move is expected to provide more regulatory clarity to gaming startups thereby aiding the future growth of the sector.

December 27, 2022 / 07:36 PM IST
(Representational image: Priyam Raj via Unsplash)

(Representational image: Priyam Raj via Unsplash)

The Indian government has designated the Ministry of Electronics and Information Technology (MeitY) as the nodal ministry to oversee the country's nascent but growing online gaming industry, paving the way for a long-awaited uniform regulatory framework to oversee the country's nascent but growing industry.

Subsequently, the Union Minister of State for Electronics and IT Rajeev Chandrasekhar said on Twitter that the ministry will soon publish rules for online gaming intermediaries and start public consultation on these rules.

The government has been mulling over plans to regulate the online gaming sector since early this year, but a major roadblock has been the absence of a nodal ministry that can oversee the sector, as online gaming intersects with multiple ministries including MeitY, Ministry of Information and Broadcasting (MIB), and Sports ministry.

The government set up a seven-member inter-ministerial task force in May 2022, chaired by Rajeev Chandrasekhar, minister of state for information technology, to work on online gaming regulations and to identify a nodal ministry for the sector.

Subsequently, the minister held multiple rounds of discussions with skill-gaming platforms, industry associations, lawyers, and gamers who sought a self-regulatory policy framework with a light touch.

This move is expected to provide more regulatory clarity to gaming startups thereby aiding the future growth of the sector.

The burgeoning Esports sector will come under the Ministry of Youth Affairs and Sports as part of multi-sports events, according to a gazette notification dated December 23, 2022 and published on December 26.

This development comes at a time when India's gaming sector has seen unprecedented growth in terms of app downloads and revenue as a result of pandemic-induced home confinement in recent years.

Revenue in the country's gaming sector increased from $2 billion in FY21 to $2.6 billion in FY22 and is expected to grow at a 27 percent CAGR (compound annual growth rate) to $8.6 billion in FY27, according to a report by gaming and interactive media venture fund Lumikai.

However, skill-based real money gaming, which accounts for more than half of the industry's revenue, has come under fire from several state governments, including Tamil Nadu, Andhra Pradesh, Telangana, Kerala, and Karnataka, which have banned or tried to ban it because gambling is a state subject.

Many of these bans were later challenged in state courts by skill gaming startups and industry associations, and the suspensions were overturned. In July 2021, the Supreme Court upheld fantasy sports as a skill-based game.

The apex court is currently hearing the Tamil Nadu government's petition challenging a Madras High Court decision that overturned the previous AIADMK-led government's November 2020 ban on online games involving the transfer of money.

All India Gaming Federation (AIGF) CEO Roland Landers stated that a uniform central regulation for online skill gaming has been a long-standing demand of the AIGF and the industry.

"This step will hopefully lead to a progressive regulatory framework underpinned by consumer welfare, and further grow the industry and will help make online gaming a cornerstone of Digital India," Landers said.

He also stated that the move to have the Ministry of Youth Affairs and Sports regulate esports as part of multi-sports events, will finally help in "recognition of an India Esports Federation, better rules and procedures for selection of India teams for international events like Asian Games and also lead to better opportunities and facilities for our esports players on par with other sportspersons."

Meanwhile, Joy Bhattacharjya, Director-General of industry body Federation of Indian Fantasy Sports (FIFS), said this move will provide clarity and certainty to investors, industry and consumers.

“The decision is in line with the government’s initiative to push for growth of the AVGC (Animation, Visual Effects, Gaming and Comic) sector and making India a global hub for online gaming. We are sure that the online gaming industry will grow responsibly under MeitY’s guidance and the industry is looking forward to working with MeitY in creating a well-balanced regulatory framework," he said.

This move could also lead to the Parliament coming up with a legislation to regulate online gaming in the future, said Jay Sayta, a technology and gaming lawyer, although he noted that it could be a long-drawn process and may involve the draft legislation being subjected to public and stakeholder consultation and scrutiny by parliamentary committees.

Lokesh Suji, Director, Esports Federation of India and Vice President of the Asian Esports Federation (AESF) also welcomed the move, mentioning that this announcement will open new avenues to pour in more investment opportunities into the booming esports industry.

"From now onwards, we will have to build the proper infrastructure, training facilities and coaching for our young esports athletes. Only a short time until we see Esports being placed in the same league as cricket, football, basketball, etc. and having similar fan power, scale and craze" he said.

Vikas SN
Vikas SN