Government Eyes 100% FDI in Online Gaming, as Per Report

The government is considering allowing 100% foreign direct investment (FDI) in the online gaming sector, as reported by Mint on July 31. If implemented, this initiative could offer significant relief to an industry currently facing substantial tax burdens and regulatory uncertainties.

According to sources, discussions are ongoing within various government levels regarding a proposal from the Department for Promotion of Industry and Internal Trade (DPIIT).

The proposed policy would permit full FDI in online real-money gaming, provided the investments exclude betting or gambling activities. Moneycontrol has not independently verified this report.

This policy shift could remove the need for official approval under the automatic route, thereby simplifying the process for startups to attract foreign investments.

An official told Mint, "The objective is to streamline the process and support the rapidly growing gaming sector. By clarifying FDI rules and allowing up to 100% investment through the automatic route, we aim to facilitate capital influx into this expanding industry."

Although 100% FDI in online gaming is not explicitly prohibited, the current regulatory uncertainty has impeded companies' ability to obtain banking and government clearances, deterring potential investors.

A clear policy could revitalize the sector, which predominantly generates revenue from real-money games such as fantasy sports and rummy. Nonetheless, the industry has faced issues regarding the classification of these games as skill-based or chance-based.

This proposal aligns with the government's broader strategy to liberalize FDI regulations across various sectors.

In the Union Budget presented on 23rd July, the government committed to simplifying FDI rules and encouraging foreign investments, including promoting the use of the rupee in international transactions.

Industry stakeholders have requested further clarification on the types of games that would be permitted under the new FDI framework to fully understand the proposed changes' implications.

Queries sent to the Ministry of Electronics and Information Technology (MeitY) and DPIIT remained unanswered at press time, the report added.