Online gaming sector is poised to boost India’s USD 1 trillion digital economy goal: Report

India’s digital transformation over the past two decades has positioned it as one of the largest and fastest-growing markets globally, with over 700 million internet users.

The country is on track to achieve a USD 300-billion electronics industry and a USD 1-trillion digital economy by 2025-26, potentially contributing 18-23 per cent to the national GDP, according to a report by the Observer Research Foundation (ORF).

A key driver of this ambitious target is the burgeoning online gaming sector, which promises to bring transformative cross-sectoral impacts.

With its growth potential, the online gaming sector is poised to boost India’s US$1-trillion digital economy goal by driving foreign direct investment (FDI), tax revenues, employment, and the development of complementary industries like fintech, Web 3.0, augmented reality (AR), and cybersecurity.

India’s gaming industry demonstrates similar dynamics, stimulating demand for processors, content, devices, and broadband access while accelerating technological development.

This ripple effect benefits sectors as diverse as media, healthcare, manufacturing, and automotive.

A Finnish study, The Digital Games Industry and its Direct and Indirect Impact on the Economy underscored how the gaming industry pioneers innovations that spill over into other sectors.

Gaming companies lead the way with rapid development cycles, innovative organizational models, and cutting-edge technologies that are later adopted by industries like real estate, information technology, and energy.

A study on The Economic Impacts of Video Game Technology Spillover noted that video game technologies like game engines, VR, AR, rendering software, and haptic feedback are now widely used across industries. For instance, sectors like healthcare employ VR and AR for medical training, while manufacturing integrates rendering software to streamline processes.

In the United Kingdom and Nordic economies, game developers’ innovations have revolutionized operations in energy extraction, IT, and machinery manufacturing, boosting productivity and efficiency. Such spillover effects in India could similarly fuel innovation and economic diversification.

India’s online gaming ecosystem is intrinsically linked to the progress made by the fintech sector. The availability of secure and efficient digital payment solutions has been crucial for the industry’s growth.

One leading Indian gaming platform processes over 4 billion micro-transactions monthly, representing approximately one in every 300 UPI transactions nationwide.

Additionally, over 20 per cent of players on this platform make their first-ever digital payment through it, underscoring the role of gaming in driving fintech adoption.

The synergy between online gaming and fintech creates a dynamic ecosystem where both sectors benefit from each other’s expansion.

As online gaming flourishes in India, it will stimulate further growth and advancements in the fintech sector, leading to more innovative payment solutions which will contribute to the broader digital economy.