India, Sept. 9 -- Not long ago, India's online gaming sector appeared to be a digital success story. Between 2019 and 2024, the market expanded at a compound annual growth rate (CAGR) of 34.2%, growing from a niche interest into a USD 2.8 billion industry by 2022, and projected to reach USD 8.6 billion by FY27. With over 591 million gamers, India represents nearly 20% of the global gaming user base.

The ecosystem had attracted investor capital of USD 3 billion, created three unicorns, and generated over 200,000 jobs across design, technology, animation, and support services. For policymakers promoting India as a digital powerhouse, online gaming had begun to symbolise the potential for scale, employment, and tax revenue.

And yet, just a...