play online games:India Introduces Strictest Regulations Yet: Bans Three Types of Games, Gaming Companies in Crisis
Rajeev Chandrasekhar, India’s Minister of Information Technology, has become a key figure driving regulatory changes in the Indian gaming industry. His introduction of the "Platform Guidelines and Digital Media Ethics Code" earlier this year caused a significant stir in the Indian gaming sector. In April, he attended a policy-making meeting and announced plans to tighten regulations on the gaming industry. The ban on the mobile game "PUBG" in India was also directly influenced by Chandrasekhar, resulting in the game’s temporary withdrawal from the Indian market until it was re-released under a new name by Krafton after ten months.
According to recent news, Chandrasekhar is preparing to implement a comprehensive regulatory framework for online games. He stated, “We are preparing a complete policy framework for online gaming regulation for the first time.” The Indian government has drafted a new law regulating the gaming industry, which is expected to cause a major upheaval in the sector.
What Does the "Strongest Regulation Ever" Include?
According to Chandrasekhar, the new regulatory bill will prohibit the listing of three types of games: gambling games, games that cause harm to users, and games with addictive features. The legislative direction is somewhat confusing based on its literal interpretation.
Regulations on gambling games are relatively straightforward. The Indian government has been tightening its standards on real-money gambling games. Online gambling apps known as “iGaming” have become popular in India, and the government has targeted betting activities, requiring app platforms to verify user identities and banning advertising platforms from displaying gambling ads.
However, the regulations for the other two categories are more perplexing. For instance, "games causing harm to users" can have broad implications, including concerns over privacy, or exposure to sensitive visual elements like nudity and violence. A notable case involved an Indian child imitating behavior from "PUBG: Mobile" which led to the game’s ban. From a minor protection perspective, such incidents can be seen as causing harm to users, giving the Indian government a justification for increased content scrutiny.
Defining "addictive features" is even more challenging. The global medical community has yet to agree on a standard for defining "gaming addiction." The WHO defines "gaming disorder" as when gaming significantly impacts one’s family, relationships, social, educational, or occupational functioning for at least 12 months. In essence, the goal of most game developers is to create engaging and enjoyable experiences, which can be misinterpreted as "addictive."
From the Indian government’s preliminary statements, this regulatory approach may lead to "pocket crimes" and provide the government with ambiguous discretionary power in enforcement. For foreign games attempting to enter the Indian market, this introduces potential instability in game operations.
The formal enactment of this regulation is still some time away, but earlier official documents offer a glimpse into the Indian government’s attitude towards gaming.
Ambiguous Official Documents
In January, India released a draft of the "Platform Guidelines and Digital Media Ethics Code," which initially aimed to regulate iGaming. However, the broad definition of "online games" in the draft raised concerns among industry professionals. This draft is now seen as a precursor to the Indian gaming regulatory framework, indicating future regulatory trends.
The draft stated: “The amendment proposes that online gaming platforms should adhere to rules and conduct due diligence, including making reasonable efforts to ensure users do not host, display, upload, publish, transmit, or share online games that do not comply with Indian laws, including those related to gambling.”
Industry insiders were concerned that this draft not only covered real-money gambling games but also broadly defined online games. The Leaflet, an Indian legal media outlet, commented: “In short, the government can define any game as an ‘online game’ under Section 6A, even if the game is free to play, as long as the government believes it promotes addiction, harms minors, or is detrimental to national security, public morals, or diplomatic relations.”
The co-founder of Outlier Games stated: “This draft was originally intended to regulate iGaming, but it unfairly includes the video game industry due to its broad definitions and blank clauses. Although there are issues with in-game purchases and violence towards minors that need discussion, it doesn’t mean we should regulate games as gambling. It’s like comparing cinemas to casinos.”
Industry Backlash
Following the release of the draft regulations, the Indian gaming industry swiftly responded. Forty-four Indian gaming companies issued a joint letter calling for the government to reconsider these regulatory measures. The letter stated: “India must align with the broader global digital and online culture. The legal framework needs to consider a range of factors, including comprehensive policy-making, a favorable business environment, and improved user standards. We want to emphasize that ‘online games’ and ‘video games’ should not be conflated. Video games are not ‘online gambling games’ and must be treated separately.”
The gaming companies also argued that the government had not adequately engaged with them during the legislative process. One executive lamented, “Our request is simple: convene a review meeting with us and listen to the gaming companies’ opinions. It is both sad and ironic that the gaming industry was not allowed to participate in the legislative process in India.” The forty-four companies submitted a 27-page report with recommendations and suggestions for future legislation.
It appears that the Indian government’s ambiguous draft may have been intentionally designed to blur the lines between gambling and video games to strengthen regulatory control. For Chinese gaming companies operating in the Indian market, this represents a significant risk.
India Cracks Down on Games: Announces 28% Goods and Services Tax
Online gaming has become a major industry in India, but a recent decision by the Indian government might spell trouble for it.
The Indian government has decided to impose a high tax on all online games. On July 11, the Goods and Services Tax (GST) Council of India announced that a 28% GST will be applied to all online game transactions. Previously, game companies were paying only nominal taxes.
According to the BBC, this means that some transactions will face a total tax burden exceeding 50%, including GST, income tax, and platform commissions.
With the implementation of this new tax, players spending $100 (approximately ₹7,150) will automatically incur a GST of $28 (approximately ₹2,000). Additionally, they will need to pay online game fees, which range from $5 to $15, and then 30% tax (TDS, income tax) will be deducted from all online winnings.
In recent years, online gaming in India has flourished, with a growth rate of up to 30%. It has attracted significant foreign investment, totaling over $2.5 billion. However, many believe that this new tax will drive investors and game companies away from India, potentially stifling the burgeoning gaming industry.
India’s decision stems from the fact that online gambling is illegal in many states, as it is defined as "based on chance." Meanwhile, online games are allowed because they are considered "based on skill," which has led to a contentious debate on whether this distinction is truly significant.
Roland Landers, CEO of the All India Gaming Federation, commented on the new tax: “It is very unfortunate that the government has made such a legally indefensible decision after previously supporting the industry. This will be disastrous for the Prime Minister’s $1 trillion digital economy dream.”
Conversely, Siddhartha Iyer, a lawyer who has been working to ban all online games, stated: “Under the GST system, the government considers these games as gambling, and I think this is correct because you are betting on something beyond your control. We tax alcohol and tobacco because we want to discourage people from engaging in these activities, and online gaming should be treated similarly.”
It seems that to curb online gambling in the region, the Indian government has chosen to impose a blanket tax on all online games, which could have a disastrous impact on a major industry.
1. What recent changes have been made to gaming regulations in India?
2. How does the new 28% GST affect online gaming?
3. What types of games will be banned under the new regulations?
4. Why is India introducing such stringent regulations on games?
5. How will these regulations impact game developers and companies operating in India?
6. What is the government’s stance on gambling games?
7. What is meant by “games causing harm to users” and how will it be regulated?
8. How will the definition of “addictive features” be determined?
9. What steps should gaming companies take to comply with the new regulations?
10. How can players and consumers be affected by these changes?