More than 125 companies from India’s nascent online gaming industry warned the Indian government that the sector could face a massive loss of investments and jobs following a decision by the Goods and Services Tax Council to increase tax rates sharply.

Earlier this week, the council imposed a levy of 28 percent at entry points on full face value for online gaming. It’s a blow to an industry which caters to over 420 million Indians, a customer base bigger than the population of the US, Bloomberg reported on Saturday.

Stocks of gaming firms such as Nazara Technologies Ltd. and Delta Corp Ltd. declined following the move.

“This would potentially have devastating implications” including the shutdown of businesses for startups and small- and medium-sized enterprises, according to a letter signed by 127 Indian companies, including Nazara Tech, the Bloomberg report stated.

They said the 28 percent levy rate should be on platform fees charged by companies to users instead of the full deposit value, which “poses a significant threat to the industry’s continuity”.

India’s online skill gaming industry has an enterprise value of $20 billion, after having raised over $1.5 billion between January 2021 and June 2022, according to the letter. The industry claims to employ around 100,000 people with revenues of $2.5 billion, forecast to double by 2025.

A Reuters report from New Delhi added top investors including Tiger Global and Peak XV, previously known as Sequoia Capital India, have invested in Indian gaming companies such as Dream11 and Mobile Premier League.

In the letter dated July 14, gaming companies including MPL urged the finance minister to rethink the move, highlighting the impact on jobs and investment.

The tax would deter potential investors, both domestic and foreign, from considering the online gaming sector in India as a viable investment destination, the letter said, and added that the current $2.5 billion plus in investments is at stake based on this decision.

India’s Finance Ministry did not respond to an email request for comment, sent outside usual business hours. Federal Revenue Secretary Sanjay Malhotra told Reuters in an interview last week that the government believes social as well as economic purposes will be served by the tax.

Many Indian ministers view bets on online gaming platforms as a “social evil”, Malhotra had said.