India's new 28 percent tax on online gaming companies will stifle foreign investment and put $2.5 billion (roughly Rs. 20,500 crore) already invested in the sector at risk, more than 100 gaming firms have said in a letter to India's finance ministry.
India this week announced the tax on the funds that online gaming companies collect from their customers. Games such as fantasy cricket have became increasingly popular in recent years, but have also raised concerns about addiction among players.
Top investors including Tiger Global and Peak XV, previously known as Sequoia Capital India, have invested in Indian gaming companies such as Dream11 and Mobile Premier League.
In the letter dated July 14, gaming companies including MPL urged the finance minister to rethink the move, highlighting the impact on jobs and investment.
The tax would deter potential investors, both domestic and foreign, from considering the online gaming sector in India as a viable investment destination, the letter said, and added that the current $2.5 billion (roughly Rs. 20,500 crore) plus in investments is at stake based on this decision.
India's finance ministry did not respond to an email request for comment, sent outside usual business hours. Federal Revenue Secretary Sanjay Malhotra told Reuters in an interview this week that the government believes social as well as economic purposes will be served by the tax.
Many Indian ministers view bets on online gaming platforms as a "social evil", Malhotra had said.
Revenues of fantasy gaming platforms rose 24 percent during the Indian Premier League cricket season from a year earlier to more than $342 million (roughly Rs. 2,800 crore), with over 61 million users participating, Redseer consultancy said this month.
Users can create a fantasy cricket team for as little as Rs. 8.
© Thomson Reuters 2023
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