Online gaming companies should rely on advertisement for revenues: Karnataka IT Minister

While Karnataka High Court will take up petitions filed by the gaming industry against the new state law banning online gambling on Wednesday, Karnataka’s IT Minister Dr CN Ashwathnarayan has ruled out any rollback or amendment in the contentious policy. Dismissing arguments related to investment losses by start-up firms, the minister said that the gaming companies should rely solely on advertisements for revenues. The doctor-turned politician in an exclusive interview to Business Today said that the Centre’s mandatory data localisation requirement proposal was in the interest of the country and will complement Karnataka’s recently notified open data policy, which allows companies to buy anonymised citizen data available with the government to make business decisions.

Amid severe manpower shortage faced by the IT sector, Karnataka government is focused on talent acceleration and will introduce subjects like artificial intelligence, cloud computing, and cybersecurity at the degree college level, the minister, who is also in charge of higher education, said in the interview while on the way to inspect one of the upgraded Industrial Training Institute on the outskirts of Bengaluru.

The upgraded institute is part of the UDYOGA programme, built in partnership with Tata Technologies Limited, to convert 150 ITIs into technology hubs, and will likely be inaugurated by Prime Minister Narendra Modi in November.

Edited Excerpts:
 
BT: Karnataka has put a ban on online gambling/gaming . While that was good as far as putting a stop to gambling is concerned, a lot of start-ups in the gaming industry and animation have got affected. Besides, an argument is that the state has not distinguished between ‘game of skill’ and ‘game of chance’. Are there any thoughts on reconsideration of the policy, maybe through some amendments to address concerns of the start-up sector?

CN: We appreciate all, but there should not be any betting or gambling. In a skill game also, there should not be any betting. There shouldn’t be any kind of financial transaction. The revenue should be based on advertisement. We have been encouraging our start-up companies and providing a lot of incentives. There are many more opportunities for them in animation, etc.

BT: But the Supreme Court has also made the distinction between a game of skill and game of chance. Even the GST Council makes that distinction and taxes the two differently, with the former taxed at 18 per cent and the latter at 28 per cent?

CN: But it is a social problem. We as people’s government realized that it is not good for the society or good for the people.

BT: So, are you ruling out any tinkering or change amid the outcry and representations from the industry?

CN: Whatever amendments we could bring in as per the request of the industry, we have brought in that.

BT: While the Karnataka government is supporting the IT industry and digital players, hand holding them, do you feel that national policies seem to be at odds, especially the upcoming national data protection policy and the national ecommerce policy? In fact, a United Nations report has noted that data restriction policies would limit exports of digital services from India and lead to a decline of 0.2 to 0.34 per cent in the country's GDP.

CN: See, data localisation is a way forward, we need to localize the data in the interest of the country. Otherwise, it will be run from elsewhere. So, we can't afford to do that. But, through Karnataka’s recently notified open data policy, we [are] going to allow sharing of data with industry with anonymity and a lot of limitations and restrictions, which will allow companies to make better business decisions. It can be taken at a cost and they can take and use it for whatever purpose they want it. But, localisation of data definitely should happen. And, based on that, now we are allowing the open data policy. Localisation is in the interest of the country. Otherwise, what will be the benefit for the country? Everything will be run by some processor elsewhere. Our citizen’s data is a rich mine, which we can’t allow others to take away.

BT: Have any of the internet or e-commerce companies come to you with concerns related to the national e-commerce policy or data protection?

CN: So far, they have not come for any concern. We have always been open to the industry. We are the most-friendly state with regard to the industry.  For all the policies we have taken them into confidence.

 
BT: Karnataka has come out with a policy to move the technology and innovation related activity outside the capital city, through Beyond Bengaluru. What has the response been so far? Are companies keen to look beyond Bengaluru? Is the infrastructure conducive enough?

CN: Through Beyond Bengaluru, we are telling companies to go beyond Bengaluru, assuring them that it is more feasible, sustainable and there will not be much of an attrition for them.  Cost will also work out better and local manpower will also be available. As a policy also we are offering a lot of incentives, co-working spaces in cubicles, research common facilities etc. Besides, many buildings and institutions are available. So far we have been able to push many companies.  Also, for this now we are connected with the lead organisation Karnataka Digital Economy Mission (KDEM), which is working closely with the industry and institutions and a task force has been constituted in each and every cluster. So, they are working very closely on the ground and connecting with companies and taking them there.

BT: But, there is an outcry over the delay in making the Infosys campus in Hubballi functional. What has caused the delay and how is the government intervening?

CN: Infosys, with all the good intentions, wanted to take the IT/ITeS services beyond Bengaluru. They established big offices in Mangalore, Mysore, and Hubli. But, things didn’t work out as expected. Infosys was also quite disappointed with this regard. Now, they are trying their best, and we are also trying to promote this.  And, with the space available in Hubli, they are also providing it to other companies. But, because of Covid and work from home companies could not occupy the office space. But now slowly that space will become occupied and probably it will become a successful model. With the National Education Policy also, we're trying to change the way that things have been done with regard to manpower. The earlier complaint was that most of the people aspire to come to Bengaluru. They didn’t want to stay in their hometowns. But Covid has changed that and pushed them back to their respective places.

BT: What is your view of the IT sector performance currently? Manpower is the biggest problem they are facing with a very high attrition rate amid sharp surge in demand post-Covid-19 due to automation of processes.

CN: A lot of companies are doing talent acceleration. As a government, we are also trying to do talent acceleration. At the university level we are ensuring that the students will be industry ready and employable so that the supply can scale up in big numbers. Tech knowledge will be part of curriculum at the degree college level and subjects including Artificial Intelligence, cyber security and cloud computing will be taught now. We will be the first state to train 5 lakh people every year.

BT: Karnataka was the first state to adopt the National Education Policy. What is the adoption roadmap like?

CN: The roadmap is there for the next 15 years. So, we have just started with the syllabus and programme structure. Next immediately, we are going into the legislation, structural reforms, administrative reforms, training for teachers, quality infrastructure, etc. As soon as more institutions skill up, we are going to give them more autonomy and decentralisation.

BT: You launched an engineering R&D policy to promote innovation. Have you got any response from companies interested?

CN: It was a long pending demand of the industry to have the engineering R&D policy, which is the strength of the state of Karnataka.

BT: So, which are the companies that have come out so far?

CN: All the companies for that matter.  All the design companies. New talent will be there They're all getting benefited.

BT: What about the data centre policy? When is it expected?

CN: Shortly we are coming up with the cybersecurity and data centre policy. It is expected any time now. It is the need of the hour and we are looking into all the inputs and suggestions that have come in. Privacy and hacking have become the biggest challenge. Protecting and storing the data has become one of the biggest challenges. Cyber issues have become bigger than the offline issues.

BT: Data centres require large land of 5-15 acres and continuous power supply. Besides, most of the existing MNCs want data centres to be set up near their head offices in Bengaluru. How is the government looking to address that challenge, with Bengaluru mostly saturated?

CN: Whatever is under the state government's domain, be it land, power supply, stamp duty, we will look into it. In most of the policies we give a lot of incentives, and here too we will give whatever incentives possible. As for power, we are a power surplus state, so continuous power supply will not be a problem. Besides,  Land banks outside Bengaluru are sufficient. But, they all want land in Bengaluru. Now they are willing to go out.

BT: What was the response during your 4-day trip to the Dubai Expo?

CN: Superb response. They are looking forward to invest in the state of Karnataka. Evolvence Group, Crescent Group, Decker & Halabi, Aster DM Healthcare, Meitra Hospital and Mubadala Investment Company among others have shown interest to invest in Karnataka.

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