Indian animation, visual effects, gaming, and comic industry to show 68% growth by 2026: Report

A study conducted by The Foundation for Economic Growth and Welfare (EGROW Foundation), in collaboration with Primus Partners revealed that India’s animation, visual effects, gaming, and comic (AVGC) industry is anticipated to exhibit 68% growth by 2026.

The study, titled ‘India’s Booming Online Gaming Industry: A Potential Powerhouse’, stated the potential growth will be highly driven by the gaming sector. The findings further revealed that the online gaming industry is also going to contribute to employment generation in India.

The number of employees in the online gaming industry has grown at a CAGR of 97.5% from 2018 to 2023 exhibiting a 69.88% CAGR among the male workforce and an impressive 103.15% CAGR among the female workforce.

According to the study, the sustained growth across gender lines indicates the industry’s increasing appeal and its potential to drive further economic opportunities in the Indian labour market.
 
Key highlights:
 
·         The online gaming sector’s contribution to the media and entertainment industry is projected to rise from 3.4% in 2019 to 10.5% in 2024 and 12.6% by 2026.
·         The online gaming sector’s contribution to the AVGC industry is projected to rise from 41% in 2019 to a staggering 68% by 2026.
·         Workforce growth in the industry has increased 20-fold from 2018 to 2023, with a remarkable 97.56% CAGR over the same period, underscoring the sector’s vital role in job creation.
·         Notably, the female workforce within the industry has surged, with a 103.15% CAGR from 2018 to 2023.
·         The sector has recorded an astounding 168.06% CAGR from 2018 to 2023 in terms of annual turnover.
·         Compared to other major gaming nations, the growth rate of India’s online gaming industry in the past six years has been the highest with a CAGR of 30% from 2017 to 2023.
 
Commenting on the findings, Charan Singh, CEO and founder Director of EGROW Foundation said, “The Indian online gaming industry is a significant contributor to our economy and a vital source of employment and innovation. With 455 million gamers in 2023, India boasts the second-largest gaming community globally after China.”

He further added that this thriving industry offers significant opportunities to attract foreign direct investment, create employment across various sectors and enhance investment. Additionally, it is expected to stimulate allied industries such as fintech, cloud services, data analytics, and cybersecurity.

However, according to Nilaya Varma, cofounder and CEO of Primus, navigating the recent changes in the GST framework will be crucial for online gaming platforms to maintain their growth trajectory.
 
The study also found that the retrospective taxation measures totaling Rs 1.2 lakh crore issued to gaming companies threaten to erode economic value and potentially devastate the industry. Another persisting challenge, according to the study is the recent amendment imposing a 28% tax on deposits, due to which some firms are seeking a lower tax rate and a return to the earlier valuation method based on gross gaming revenue to foster growth and attract investment.
 
Participating companies have recommended the implementation of amended IT Rules to create a national regulatory framework, a clarification on retrospective taxation, and the notification of the National Policy for Promotion of the Animation, Visual Effects, Gaming, and Comics (AVGC) sector.