Global Investors Appeal to PM Modi to Reconsider Gaming Tax, Citing Negative Effect on Prospective Investments

A group of 30 foreign and domestic investors, including Tiger Global, Peak XV (formerly Sequoia Capital India), and Steadview Capital, have appealed to Indian Prime Minister Narendra Modi to reconsider a newly proposed 28% gaming tax. The investors argue that this tax would have a detrimental impact on potential investments amounting to $4 billion in the gaming industry. The tax was recently introduced on the funds collected by online gaming companies from their customers, aiming to address concerns about addiction among players.

In a letter to the Prime Minister, the investors expressed their shock and dismay over the tax decision, stating that it could significantly erode investor confidence in the Indian tech ecosystem, particularly in the growing gaming sector. They highlighted that this move would adversely affect prospective investments, potentially amounting to at least $4 billion over the next 3-4 years, thereby hindering the sector's growth in India.

The letter represents the first instance of direct lobbying by investors against the gaming tax proposal. However, the Indian government has defended its stance, with some ministers viewing online gaming as a "social evil," leading to the tax implementation. Despite pleas from the gaming industry, the government has not shown willingness to consult further on the matter.

Tiger Global and Peak XV have previously invested in Indian gaming companies like Dream11 and Mobile Premier League, among others. Alongside the investors' letter, over 100 gaming firms have also written to the finance ministry with similar concerns, emphasizing that the tax could stifle foreign investment and put at risk the $2.5 billion already invested in the gaming sector. The tax proposal is currently awaiting parliament's approval.