International investors have also been drawn to the industry, with Tiger Global backing Indian gaming startup Dream11, the lead sponsor of India's national cricket team.
India's Finance Minister Nirmala Sitharaman, who chairs the goods and services tax (GST) council, comprising state finance ministers, said the decision to tax online gaming was reached after extensive discussion.
"The implementation of a 28% tax rate will bring significant challenges to the gaming industry.
This higher tax burden will impact companies' cash flows," Aaditya Shah, chief operating officer at the gaming app IndiaPlays, said.
Roland Landers, CEO of The All India Gaming Federation, said the decision was "unconstitutional (and) irrational".
Persons:
Dado Ruvic, Nirmala Sitharaman, Shah, Roland Landers, Sudipto Ganguly, Aftab Ahmed, Mark Potter, Jane Merriman, Barbara Lewis
Organizations:
REUTERS, Tiger Global, national cricket team, India's, Industry, The, India Gaming Federation, Thomson
Locations:
DELHI, India