India’s gaming sector stands at a critical juncture. Thoughtful regulation can help it realise its immense potential while safeguarding consumers
Two seemingly disparate sectors—India’s gaming industry and capital markets—are drawing significant attention in public policy discourse. Both sectors hold immense promise: gaming contributes to job creation, while capital markets foster capital formation. However, both also pose substantial challenges. Gaming can lead to habit formation and addiction, while the Futures and Options (F&O) segment of capital markets carries risks of speculative losses. Policymakers have tackled these challenges differently, with contrasting approaches in gaming and F&O regulation.
The Opportunities and Challenges: India is a global gaming hub, housing 40 per cent of the world’s gamers—around 568 million players—and employing 15,000 developers. The sector’s revenue is projected to grow from $3 billion in 2023 to $6 billion by 2028, potentially creating 250,000 new jobs over the next decade. With development costs in India nearly 50 per cent lower than the global average, gaming has the potential to generate significant export revenues.
However, this growth depends on balanced regulation, particularly concerning gaming’s habit-forming nature. Unfortunately, current proposals by the Ministry of Electronics and Information Technology (MeitY), the Advertising Standards Council of India (ASCI), and other stakeholders lean toward rigid, prescriptive measures, drawing inspiration from China’s heavy-handed regulatory framework.
Flaws in Current Gaming Regulation
1. Time and Age Restrictions Proposals to impose strict time limits and age restrictions on gaming apps are touted as innovative but raise significant concerns. Forcing intermediaries to monitor minors’ activities infringes on privacy and contravenes the data minimisation principle of India’s Digital Personal Data Protection Act (DPDPA). Such policies may inadvertently lead to surveillance overreach, compromising minors’ online privacy.
Parents, who have a far greater vested interest in their children’s wellbeing, are better positioned to manage their gaming habits. Handing this responsibility to unelected bureaucrats not only undermines parental discretion but also risks creating intrusive and overly broad policies.
2. Blanket Warnings and Advertising Restrictions
The Ministry of Education’s 2021 advisory linking online gaming to “gaming disorder” is an overgeneralisation. Such broad statements, without clinical substantiation, stigmatise gaming and equate it with gambling. Similarly, ASCI’s restrictions on advertisements portraying gaming as a viable career path stifle creativity. These measures lump educational and cerebral games with gambling-like activities, disincentivising developers from creating “good habit-forming” games. This could slow innovation and limit the gaming sector’s growth potential.
Learning from SEBI’s Approach to F&O Regulation
The Securities and Exchange Board of India (SEBI) faced a similar challenge with F&O trading, where explosive volumes exposed retail investors to speculative risks. Instead of resorting to outright bans.
Key Steps by SEBI:
Increased Contract Sizes: Raising the minimum investment size by 50 per cent reduced speculative trading by retail investors.
Disclosure Requirements: Brokers were mandated to display potential downsides prominently, promoting informed decision-making.
Structural Adjustments: Limiting weekly expiries to one per exchange curbed excessive speculative activity.
These steps exemplify a balanced approach—relying on nudges and incentives rather than bans. SEBI recognised that heavy-handed policies could undermine broader goals, such as increasing equity market participation.
India’s gaming sector can benefit from SEBI’s measured approach to F&O regulation. Policymakers must embrace strategies that balance innovation, consumer protection, and industry growth. Here are three actionable recommendations:
1. Nudges and Incentives Over Mandates: Rather than micromanaging user behavior, regulators can incentivise responsible gaming through voluntary measures. For instance, gaming platforms could offer rewards for adhering to healthy gaming limits.
2. Transparent Education Over Stigma
Policymakers should prioritise honest disclosures about gaming’s potential downsides instead of messaging that fosters shame. Clear and factual communication can empower gamers to make informed choices without demonising the industry.
3. Consideration of Unintended Consequences: A tunnel-vision approach risks stifling innovation and creating barriers to growth. Policymakers must evaluate how restrictive measures might deter investment, hinder creativity, or drive users to unregulated platforms.
(The writer is Founder & Principal, Black Dot Public Policy Advisors; views are personal)
