RMG firms fear global expansion could be hit by unclear ODI rules in Online Gaming Act

As the Ministry of Electronics and Information Technology (MeitY) prepares to notify the Promotion and Regulation of Online Gaming Act, 2025 (PROGA) by mid-November, stakeholders in India’s digital gaming and technology ecosystem are pressing for urgent clarifications on the law’s overseas investment and service provisions.

The Act, passed in August and granted Presidential assent on August 22, aims to promote innovation in e-sports and social gaming while imposing a blanket ban on all forms of real-money gaming — whether games of skill or chance. However, industry representatives say certain provisions of the law, particularly Section 5, could inadvertently hinder legitimate overseas operations and software exports by Indian firms.

“The current language of the law creates ambiguity on whether Indian companies can run Global Capability Centres (GCCs) or provide software to foreign real money gaming platforms that operate strictly outside India,” said Jay Sayta, Gaming and Tech lawyer. “Without explicit clarity, even backend or B2B services could be misinterpreted as violations.”

According to submissions made to MeitY, several Indian real money gaming and technology firms either already own subsidiaries abroad or plan to set up new entities to offer online money gaming services in foreign markets. Companies are seeking clarity on whether such Overseas Direct Investments (ODI) — made before or after the law takes effect — will be treated as legitimate under the Foreign Exchange Management (Overseas Investment) Rules, 2022.

Stakeholders have urged the ministry to issue a formal notification or an order under Section 20 of the Act to explicitly permit Indian firms to invest in or partner with foreign entities, as long as those entities do not target Indian users.

Industry submissions also call for clear exemptions that allow Indian companies to invest in foreign subsidiaries offering money gaming services exclusively in overseas markets. They further seek clarification that business-to-business software, licensing, and game development agreements with foreign real money gaming companies will not be considered violations, as long as these services are not offered to Indian users.

Additionally, stakeholders want confirmation that Global Capability Centres (GCCs) in India can continue providing backend, compliance, and technical support to offshore gaming platforms, provided such operations remain strictly limited to non-Indian markets.

“The absence of such clarity could discourage global gaming companies from using India as a technology and services hub,” said another stakeholder, adding that “India’s digital export potential in the gaming domain could be severely undermined.”

While the Act marks a milestone in India’s efforts to regulate the online gaming sector, stakeholders stress that a “one-size-fits-all” interpretation could stifle innovation and legitimate exports.

“The objective is not to dilute the ban on money gaming for Indian users,” said a policy expert familiar with the discussions. “But the government must draw a clear line between prohibited domestic operations and permissible international business.”

In a bid to ensure coordinated enforcement, the government is also formalising the Online Gaming Authority of India (OGAI), which will also include representatives from the Ministry of Home Affairs (MHA) and the Ministry of External Affairs (MEA). The inclusion of these ministries, officials said, underscores the government’s intent to tackle offshore gambling operations that target Indian users.

The Ministry of Electronics and Information Technology (MeitY) has invited public comments on the Promotion and Regulation of Online Gaming Act, 2025, seeking to build a structured and accountable framework for the country’s fast-growing online gaming sector. The feedback/comments on the draft rules to be submitted by 31st October, 2025.

With the notification of rules expected by the second week of November, the industry hopes MeitY will issue detailed clarifications to ensure that the PROG Act promotes responsible gaming without compromising India’s position as a global technology and services hub.