Deregulation Agenda in India
Economic Survey 2024-25: Calls for accelerating deregulation and urges the government to step aside for businesses to thrive.
In practical terms, Deregulation means reducing unnecessary government interference in sectors to promote growth and innovation.
Potential of the Online Gaming Sector
Growing Sector: Online skill-based gaming is rapidly expanding, with startups becoming unicorns.
Market Opportunity: India has 650 million smartphone users and a young population, positioning it well to lead globally in online gaming.
Economic Impact: The sector is valued at ₹33,000 crore in 2023, expected to reach ₹66,000 crore by 2028, growing at a CAGR of 14.5%.
Job Creation: Online gaming could generate 2-3 lakh more jobs in the coming years, on top of the 2 lakh already created.
Challenges in Taxation and Regulation
The Union and State governments impose a 28% GST on online gaming, which is typically reserved for harmful sectors like gambling.
Legal Issues: Some states attempted to ban online gaming, classifying it as gambling, which courts overturned, recognizing skill-based games as legal.
The high tax burden could bankrupt smaller gaming startups and fuel illegal gambling operations.
Recommendations for Effective Deregulation
Rationalizing GST: The government should adjust the GST rates on online gaming to encourage growth.
Co-create a Framework: Work with the online gaming industry to develop a balanced and clear regulatory framework.
Dropping the retrospective GST demand would remove unnecessary legal hurdles and foster sector growth.
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