RMG Changes Would Provide Relief to Indian Gaming Businesses

India might allow 100% Foreign Direct Investment (FDI) for real-money gaming companies, without official approval, reports say. According to Mint, the government has proposed to allow companies to access full FDI via an automatic online RMG route.

If enacted, this measure would allow monetary amounts up to the value of the entire business to be invested through this automatic process. This could provide much-needed relief to India’s real money gaming sector, which has taken a significant blow by the recent implementation of the 28% Goods and Services Tax.

An anonymous official familiar with the matter told Mint that the measure would allow real-money startups in India to raise foreign capital.

Still, the proposal is yet to be clarified, considering that there are a lot of uncertainties related to FDI under the automatic route. Despite that, the official was certain that this automatic route would bolster capital generation for the gaming sector.

Indian law, for context, does not necessarily prohibit 100% FDI. However, existing regulations could be a major setback to companies that might try to receive all necessary approvals.

The Measure Would Only Apply to Skill-Based Games

It should be noted, however, that the discussed measure would not apply to games of chance and would be instead limited to the skill-based market. India considers rummy and poker to constitute games of skill, allowing them under the current system.

However, online casino gaming and sports betting are still only operating in the grey market and, although they pay the goods and services tax, do not enjoy many of the benefits the better-regulated skill-based sector does.

Speaking of skill-based gaming in India, rummy leader Passion Gaming recently reacquired all of its shares from Rank Group. The company leadership praised the development, highlighting how rare it is for a company to reassume control of its business.

In the meantime, online gaming and betting giant Stake.com reaffirmed its commitment to the Indian market, doubling down on IPL betting amid an exodus from the sector. While many of Stake’s competitors decided to pull out from India because of the GST tax on turnover, Stake vowed to remain active and grow its local presence.