As Finance Minister Nirmala Sitharaman prepares to present the Union Budget 2026-27, India’s gaming and esports industry is once again pressing for long-pending structural reforms. After a challenging year marked by high taxation and regulatory uncertainty, industry leaders are hoping the government will move beyond legitimacy debates and focus on enabling sustainable growth, domestic IP creation and global competitiveness.
At the top of the industry’s wish list is the rationalisation of GST on skill-based gaming. Despite repeated representations last year seeking a reduction from 28% to 18%, the demand remains unaddressed. Stakeholders argue that the current tax regime continues to strain startups and deter long-term investment, especially in skill-based formats that are distinct from gambling.
The passage of the Promotion and Regulation of Online Gaming Act, 2025, has, however, brought a degree of clarity. The law draws a firm line between constructive online gaming such as esports, educational and social games, and harmful online money games involving betting and gambling. By banning real-money gaming advertisements, blocking transactions and creating a central authority for oversight, the Act aims to ensure a safer digital ecosystem while protecting legitimate gaming businesses.
Industry leaders believe this separation now creates room for policy conversations to shift from regulation to growth.
Akshat Rathee, Co-founder and Managing Director of NODWIN Gaming, stressed the need for practical policy enablers rather than headline-grabbing announcements. “I’m hopeful that this year’s Union Budget acknowledges gaming and esports as emerging pillars of India’s digital and creative economy,” Rathee said. “What the sector now needs is execution-focused policy support. This includes fair and differentiated taxation for esports on par with traditional sports, easier access to banking and financial services for gaming businesses, and targeted funding under the AVGC framework to support Indian game development and original IP creation.”
Animesh Agarwal, Co-founder and CEO of S8UL Esports said, “With the Promotion and Regulation of Online Gaming Act now in place, the conversation around gaming and esports has shifted from legitimacy to capacity building. This Budget presents a timely opportunity for policymakers to commit fiscal support towards training, infrastructure, grassroots competition development, and strengthening India’s global position in esports.”
Source: PwC
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According to a PwC India report, the video games and e-sports market has emerged as one of the fastest-growing segments globally over the past few years. In 2024, the sector generated revenues of USD 2.7 billion, registering a sharp 43.9 percent year-on-year growth, a significant acceleration from the 16.8 percent growth recorded in 2023. While the pace of expansion is expected to soften in the coming years, the market is still projected to grow to USD 4.0 billion by 2029, at a CAGR of 7.7 percent.
India’s e-sports market, in particular, is witnessing rapid expansion. Revenues stood at USD 11 million in 2024 and are expected to more than double to USD 23 million by 2029, growing at a CAGR of 16.4 percent.
Sponsorship continues to be the largest revenue contributor, accounting for USD 4.9 million in 2024 and projected to cross USD 11 million by 2029, reflecting a CAGR of 17.7 percent. Media rights are also emerging as a key growth driver, with revenues forecast to increase from USD 3.3 million in 2024 to USD 7.3 million by 2029.
Industry bodies argue that this scale gives India a natural advantage in creating globally relevant gaming intellectual property, provided policy support aligns with long-term objectives.
Sagar Nair, Head of Incubation at LVL Zero Incubator, “As India’s gaming and esports ecosystem matures, this Budget presents an opportunity to shift the conversation from consumption to creation. The industry today needs regulatory and taxation clarity across mobile, PC, and console gaming to unlock long-term capital, enable predictable business planning, and attract global publishing partnerships.”
AVGC-XR mission and skilling in focus
The government’s intent to back the creative economy took a concrete step in December with the operationalisation of the National Centre of Excellence for AVGC-XR as the Indian Institute of Creative Technologies.
Backed by an investment of ₹391.15 crore, the institute is modelled on the lines of IITs and IIMs and aims to address skill gaps in virtual reality, augmented reality and 3D modelling.
With 17 specialised academic programmes across gaming, animation, post-production, comics and XR already launched, the institute is seen as a critical foundation for future-ready talent. However, industry leaders say budgetary allocations and execution will be key.
“Clear budgetary commitment toward the AVGC-XR mission, with a focus on original IP creation, advanced skilling, and studio incubation, can meaningfully accelerate India’s position as a global game development hub,” Nair added.
Beyond game development, esports stakeholders are seeking formal recognition and ecosystem-level investments. From grassroots tournaments to international participation, industry players believe structured support can unlock India’s competitive potential.
“Treating esports prize money taxation in line with traditional sports, strengthening esports’ role within Khelo India, and encouraging participation across schools, colleges, and states can significantly boost grassroots development,” said Vishal Parekh, Chief Operating Officer at CyberPowerPC India. “We are hopeful the upcoming budget will support these priorities and help India build a globally competitive gaming and esports ecosystem.”
Hardware access is another concern, with calls for incentives that lower the cost of gaming PCs and consoles, encourage local manufacturing and support export-led growth. Stakeholders argue that without addressing infrastructure and hardware constraints, India risks remaining a consumption-heavy market rather than a creator-led powerhouse.
Taken together, the industry’s expectations from Budget 2026-27 are clear. GST relief for skill-based gaming, focused AVGC-XR funding, esports recognition, skilling and incubation support, and export-oriented incentives are seen as essential to help India move beyond scale alone and build a sustainable gaming economy with global relevance.