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Indian government considers expanding incentives to gaming device makers: Report

With Indian gaming companies growing in size, the government wants to leverage the trend with production-linked incentives.

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“Gaming is going to be immersive in nature as AR/VR content is going to increase due to innovation.  The government is coming up with a broader scheme to support them with incentives,” the Ministry of Electronics and Information Technology (MeitY) joint secretary Saurabh Gaur said at an online discussion organised by the Internet and Mobile Association of India (IAMAI), according to a report by the Press Trust of India

“We would like to see games getting developed for the Indian audience, something that promotes our culture,” MeitY Joint Secretary Gaur was quoted as saying. 

Gaur informed viewers that MeitY was collaborating with the I&B ministry and the culture ministry to develop the gaming ecosystem in India, the report added. 

Indian gaming is expected to generate $3.9 billion in revenue by 2025, according to an IAMAI-Redseer report released at the virtual meeting. Moreover, the Indian government has been steadfast in chasing a policy of showcasing India as a manufacturing hub. It has announced PLI schemes for several sectors like drones, electronics, telecom, among others. 

PLI schemes in place for other sectors

Drone industry

The Indian government last month announced a Rs. 120 crore-PLI scheme for the drone industry which it claimed will bring investments of over Rs 5,000 crore in three years. This outlay is part of the Rs 26,000 crore earmarked for the PLI scheme of the automobile sector.

In its PLI document, the Ministry of Civil Aviation reasoned that it was bringing drones under the incentive scheme as there was a lack of early-stage funding and bank loans for drone startups. The ministry said that for the industry to succeed in the future, it will need access to fiscal and monetary support — like other countries.

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  • The PLI scheme offers an incentive of 20% to the manufacturers of drones and developers of drone-related software on their value addition. (The value additional shall be calculated as the net sales minus the purchase cost of drone components used therein)
  • The minimum value addition norm has been fixed at 40% of net sales instead of 50% as in other PLI schemes.

Telecom 

The government had announced PLI schemes in 10 key sectors in November 2020, earmarking Rs 12,195 crore for the telecom sector. 

  • The scheme is expected to facilitate local manufacturing of 4G/5G and wireless equipment, IoT access devices, and enterprise equipment such as routers and switches.
  • The incentive rates for the PLI Scheme for telecom and networking products will stand at 6% for the first two years, 5% in the next two years, and 4% for the fifth year. 
  • The total incentive amount will be spread over five years. PLI can be considered a kind of subsidy in the form of a direct payment from the government’s budget to goods made in India. 
  • Manufacturers that achieve a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods net of taxes will be eligible for the scheme. Qualified investors will be incentivised up to 20 times of minimum investment threshold, the government has claimed in a statement.
  • The government expects the scheme to lead to incremental production of around ₹2.4 Lakh Crores with exports of around ₹2 Lakh Crores over 5 years, with FDI expected to be over Rs 3,000 crore.

Data Centres

The Indian government is mulling an incentive scheme of Rs 12,000 crore to encourage companies to set up data centres across the country, as per an Economic Times report

The government is expecting an investment of ₹3 lakh crore, from domestic and international companies, in the next five years as a part of the hyper-scale data centre scheme and is planning to provide other incentives such as three percent to four percent of capital investment, along with real estate support and faster clearances. The ET report shared the following details regarding the incentive scheme: 

  • The scheme is being proposed by the Ministry of Electronics and Information Technology (MeitY) to promote the domestic manufacturing of high-end servers.  
  • There will be an incentive of a specific percentage on the purchase of servers from domestic manufactured sources which can be deployed in the data centres. 
  • The incentive scheme is reportedly in tandem with the Draft Data Policy, 2020 introduced by MeitY.

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