File photo: Employees work at the assembly line inside TMB’s mobile phone battery manufacturing plant in Noida, India, October 12, 2018
| Photo Credit: ANUSHREE FADNAVIS

Thirty-two firms have expressed interest in the Ministry of Electronics and Information Technology’s subsidies for local laptop, PC, server and tablet assembly, IT Minister Ashwini Vaishnaw said on Wednesday. The applicants include Dell Inc., the Hewlett-Packard Company, better known as HP, and other firms that work with large brands for assembly. 

Under the Production Linked Incentive (PLI) scheme for IT hardware, the Union Government will provide a 5% incentive to brands on fresh local production of these IT products to give firms a reason to tolerate other high costs of producing in India, compared to global assembly hotspots like China and Vietnam. Mr. Vaishnaw argued that even though local assembly was not very high in value addition, it was a starting point for other component production ecosystems to set up shop in India.

The government has been pursuing local production aggressively, to the point of restricting imports of laptops in India, requiring licences for bringing these products in from other countries. While the government insisted that most licences would be issued relatively quickly, it came under fire for a move that was reminiscent of the licence permit raj. The Centre eventually deferred licensing requirements, which were supposed to come into effect immediately, to the beginning of November.

The strategy has its critics. Raghuram Rajan, former governor of the Reserve Bank of India, has been speaking out against the enormous fiscal allocations for smartphone and hardware PLI schemes, arguing that the low job generation and minimal value addition do not justify the tens of thousands of crores of rupees that have been allocated to PLI schemes. Mr. Vaishnaw and IT Minister of State Rajeev Chandrasekhar have responded with the ecosystem expansion defence, additionally arguing that Dr. Rajan was “shadowboxing” and indulging in partisan arguments.

Dr. Rajan argued in an interview with the journalist Karan Thapar on August 11 that small electronics have very low transportation costs, and so manufacturers may not stay in India beyond the PLI period. “This [local electronics assembly] may remain where it is, where you pay for this work they do in India,” Dr. Rajan said, “and then when the subsidies stop, they say well, thank you, it was nice being in India, but you haven’t fixed the disabilities that force you to pay the subsidies.” The IT hardware PLI scheme has an outlay of ₹16,939 crore, and ends in March 2028.

The video gaming industry has said the term ‘online gaming’ is a broad and ambiguous term that is causing confusion among gamers, games publishers, international investors and media amid the GST row. Image used for representational purposes only.
| Photo Credit: Special Arrangement

As many as 45 video game companies in India on July 26, 2023, wrote to the Prime Minister’s Office and to the Ministries of Information & Broadcasting, and Electronics & Information Technology, seeking to put distance between themselves and the real-money gaming industry, amid the ‘widespread confusion’ caused by the latter being referred to as ‘online gaming’.

The real-money gaming industry, which consists of fantasy sports, poker, rummy and other such apps where users can deposit money and compete with other users, has been hit with a 28% GST on all deposits, a move that the industry has criticised. Both the government and the real-money gaming industry use the phrase ‘online gaming’.

The video-gaming firms, such as Outlier Games, SuperGaming and Firebolt Entertainment, are now calling for the government to put an end to this confusion. “‘Online Games’ is too broad […] a term and carries a different meaning in Indian jurisprudence compared to the global understanding, leading to confusion among gamers, international investors, game publishers, and media during the GST row,” the firms said in their letter to the PMO, which has been viewed by The Hindu. 

“This confusion has played a considerable part in fuelling the recent controversy on 28 percent GST. What is being called “Online Games/Online Gaming” in India is known as ‘iGaming’ internationally.”

Also Read | The blurred lines between gaming and gambling

“Let me break the bubble,” Chirag Chopra, the Founder and CEO of New Delhi-based Lucid Labs said. “The Indian game industry is more than Real Money Games, and believe it or not, they are here to stay. No matter what they try to tell you on social media, your beloved games will not be taxed 28 percent; that privilege is reserved for … Real Money Games.”

Video games themselves have long been taxed at 18%, and the government has clarified that the 28% GST on deposits for ‘online gaming’ only applies to the real-money gaming industry. The latter industry has fervently opposed the 28% GST that was slapped on deposits, arguing that users would be discouraged from playing if they had to pay 28% over and above what they were playing games like poker with.

Also Read | Explained | Will 28% GST on online gaming affect its growth?  

“The negative sentiments and social stigma towards games involving monetary wagering are unfairly linked to video games in Indian society, leading to misconceptions about our industry’s products and services,” the letter argued before the government.

It’s not just confusion to the general public that is at stake. “International game corporations, publishers and investors are under the impression that the Indian regulatory system does not differentiate between Video Games and RMG/Fantasy Sports (iGaming) and applies blanket regulations to both industries,” the letter pointed out. “This has resulted in hesitation to invest in Indian video game companies and discouraged potential investments, co-productions, and strategic partnerships.”