Tiger Global, Peak XV and Steadview Capital are among 30 foreign and domestic investors asking Indian Prime Minister Narendra Modi to review a 28 percent gaming tax, saying the levy would adversely impact $4 billion (roughly Rs. 32,811 crore) in prospective investments, a letter showed.
India last week announced the tax on the funds that online gaming companies collect from their customers. Games such as fantasy cricket have become increasingly popular in recent years, but have also raised concerns about addiction among players.
The tax decision “has caused shock and dismay, (and) will substantially and meaningfully erode investor confidence in the backing of this or any other sunrise sector in the Indian tech ecosystem,” said the letter, signed by the investors and seen by Reuters.
The decision will “adversely impact prospective investments to the tune of at least $4 billion (roughly Rs. 32,811 crore) in the next 3-4 years and hence the growth of the gaming sector in India,” added the letter, the first instance of direct lobbying by investors against the tax move.
PM Modi’s office did not respond to a request for comment. The tax proposal is pending parliament’s approval.
Tiger Global and Peak XV, previously known as Sequoia Capital India, have invested in Indian gaming companies such as Dream11 and Mobile Premier League.
Despite the industry’s pleas, India’s government has said many ministers in the government tax panel viewed bets on online gaming platforms as a “social evil”, and there was no need to further consult the gaming industry on the matter.
Over 100 gaming firms wrote a letter recently to the finance ministry with a similar request, saying the tax will stifle foreign investment and put $2.5 billion (roughly Rs. 20,500 crore) already invested in the sector at risk.
© Thomson Reuters 2023