The establishment of the AVGC promotion task force in the Budget 2022 has fueled the industry with new reforms to self-reliantly cater to the growing demand. However, yet many areas of potential are untapped.
The blog discusses StockGro expert Priyank Sharma’s opinions on how “The AVGC (Animation, Visual Effects, Gaming, and Comics) sector in India is set for significant growth, supported by the expansion of broadband connectivity in Tier-II and Tier-III cities.” He is bullish about the sector in 2025 due to anticipated growth of 16% in the industry.
Priyank Sharma expresses his views about the impact of the Budget on the AVGC sector and the overall growth trajectory of the industry in India.
The optimistic sentiment ruled the AVGC sector in 2024. However, there is still much scope for improvement in the sector. Currently, the AVGC-XR (including extended reality) sector accounts for nearly 20% of the media and entertainment industry in India. The untapped potential of the AVGC sector lies mainly in skill building and infrastructure.
Data suggests that the animation sector exceeded the performance to reach the mark of US$ 2.4 billion in 2024. Moderate performance was observed in the VFX industry. As per the trend in recent years, the gaming industry performed strongly by expanding to US$ 3.8 billion in FY 24, with 23% growth. Priyank Sharma says, “ India’s online gaming community has grown rapidly, becoming the second largest globally, behind China.”
Some highlights for this sector in 2024 can be the tax tussle for gaming, a crucial announcement for the establishment of the Nation Centre of Excellence (NCoE) for AVGC sector, growing foreign influence, awaiting National AVGC-XR policy and rollout of state AVGC-XR policies.
As the past year and industry trends indicate, a developing nation like India with such a large workforce can create magic with the right blend of technology, skills and innovation in the AVGC sector.
Following the industry highlights, 2025 could be an important year for AVGC-XR. As Priyank Sharma explains “The government is actively promoting the gaming industry through initiatives like amendments to the IT Rules of 2021 to regulate online gaming and protect users from harmful content and addiction”. Therefore, In terms of the Budget 2025, we can expect some changes in terms of taxation policies, regulations for gaming and VFX companies, startup boost, and more.
In the past few months, the government has faced the challenge of combating foreign gaming companies for their registration in India. Therefore, some policies or taxation norms may be amended regarding this. In the Union Budget 2025, emphasis can be laid upon the AVGC sector skill building through early schooling or graduation courses and competitions in the country.
Apart from the Budget 2025, the government may soon announce the ‘National AVGC-XR Policy’ by the end of this year.
The policy is long due since the establishment of a task force in 2022. It will focus mainly on 4 aspects of the AVGC sector - Skill building, infrastructure, innovation and regulatory measures. The task force includes several experts from the Ministry of Information and Broadcasting and private companies. Currently, many states, like Karnataka, Kerala, Rajasthan, etc., have already released their particular AVGC-XR policy.
Priyank Sharma points out that “ With the rise of OTT platforms, AR/VR adoption, and increased outsourcing demand, the sector is expected to grow at over 16%, making India a global AVGC hub”. Apart from basic objectives, this policy may also play a crucial role in developing cutting-edge infrastructure and technical support in the country. Moreover, financial incentives under this plan will facilitate global partnerships, promoting self-reliance and employment to some extent.
The sector is in its significant phase, where demand and global competition are growing rapidly. However, as mentioned before, the challenges regarding awareness, upskilling, infrastructure and technology.
The Intellectual Property Rights (IPR) and other regulatory frameworks for the animation sector, VFX companies or gaming industry are still in the making stage in India. Therefore, the pending changes may seek to address these issues.
It won’t be an exaggeration to indicate that the Indian AVGC sector will have a bright growth trajectory in the upcoming years. In nearly a decade, India will be contributing more than 10% to the global gaming industry. The Indian gaming industry will grow to US$ 4.67 billion by 2026.
Overall, the gaming, animation and VFX sectors will jointly grow to become US$6.8 billion. The share of the animation sector and VFX in the total AVGC sectors will grow up to 5% or 6% by 2026.
Moreover, if the resources are utilised properly, the industry is capable of generating nearly 1.6 lakhs per annum by 2030. It will catalyse the Indian talent and technology upgrade process. Therefore, the correct utilisation of resources and plans is necessary to unlock this growth.
Taxation has been a key issue for the gaming industry. Currently, it falls in the 28% GST slab. However, to promote the sector in this initial stage, the taxation can be revisited with some incentives. Moreover, the taxation framework for foreign gaming companies should be considered. However, in the Budget 2025, there may not be significant changes in the taxation norms.
The expert details on the StockGro platform how the AVGC sector is drawing attention from investors, with large-cap IT companies like TCS and Infosys being top choices.
Priyank Sharma adds that, “Investors should also explore emerging opportunities in newer listed companies like Nazara Technologies, which is currently trading close to its IPO price. For more details on his advisory calls, connect with him on StockGro.
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