Foreign and domestic investors, including Tiger Global, Peak XV, and Steadview Capital, have raised concerns over the Indian government’s decision to impose a 28 percent gaming tax.
In a joint letter addressed to Indian Prime Minister Narendra Modi, the investors argue that the tax could have a detrimental impact on prospective investments amounting to $4 billion in the gaming sector.
The new gaming tax was announced recently, targeting the revenue collected by online gaming companies from their customers. While games like fantasy cricket have gained immense popularity in India, concerns have also been raised about potential addiction issues among players.
The investors’ letter expresses shock and dismay at the tax decision, stating that it could significantly erode investor confidence not only in the gaming sector but also in other emerging tech industries within India. They emphasize that this move could adversely affect the gaming sector’s growth in the country over the next 3-4 years.
Tiger Global and Peak XV, previously known as Sequoia Capital India, have been actively investing in Indian gaming companies such as Dream11 and Mobile Premier League. However, despite the pleas from the industry and investors, the Indian government has labeled bets on online gaming platforms as a “social evil” according to certain members of the government tax panel. Furthermore, the government has indicated that they do not see the necessity to involve the gaming industry further in the decision-making process.
In response to the tax proposal, over 100 gaming companies have also written a letter to the finance ministry, echoing similar concerns about the potential stifling of foreign investment and jeopardizing the $2.5 billion already invested in the sector.
As of now, the gaming tax proposal is still pending approval from the Indian parliament. The investors and gaming industry stakeholders are hopeful that their collective efforts will prompt a review of the tax decision and lead to a more favorable outcome for the sector’s growth and development in the country.