After online gaming was hit with the new 28% GST, there was a major backlash from the industry and its stakeholders. Now, it appears that even global investors are concerned over the new changes as they wrote a letter addressed to the Indian Prime Minister Narendra Modi.
Who are these Global Investors?
The group that wrote to the Indian PM includes international startup investors and some domestic players as well. Some notable names include Tiger Global, Peak XV Partners, and Steadview Capital, who expressed their concerns over the 28% tax on online gaming. The group is openly against the GST Council’s decision and believes that it can seriously harm the industry. These companies also hold stakes in popular real-money games like Dream11, Games24x7, MPL, and more.
Why is Online Gaming at Risk in India?
As per the investors, the recent tax hike in online gaming is creating a “tax regime” in the gaming sector that isn’t seen in any other region. Furthermore, it may lead the online real-money gaming sector to write off a sizeable sum of $2.5 billion and possibly lead to the loss of 1 million direct and indirect jobs. Voicing their disapproval of the GST Council’s decision, the investors’ letter to Narendra Modi stated that a 28% GST also groups the permissible skill-based games with gambling businesses.
The letter adds that 28% GST might have investors shy away from the industry and any other emerging sectors within the Indian tech ecosystem. Online gaming is a booming market in India. The fantasy sports category is just one part of the industry but rakes in billions of dollars. Certain platforms like Dream 11, Games 24×7, and MPL combined account also have a valuation in the billions. The group is urging the Centre to evaluate all of these aspects before implementing the new taxation rule, but it is unclear what action the government will take.