The Internet economy in India has the potential to grow to $200 billion by 2020, contributing to as much as 5% of the country’s GDP.
This growth will be majorly powered by better computer literacy and greater use of data on mobile.Sectors like e-commerce and online payments will receive a massive boost from the explosive growth of India’s Internet user base, in turn helping grow the economy.
Rural: It is expected that the percentage of Internet users from rural locations will grow to 40-50 percent by 2018, up from 29 percent in 2013. The massive influx will open up several avenues for business, with the charge being led by e-commerce, e-banking services.
Mobile: Access of the Internet via mobile is already dominant in India, and is estimated to have breached the 185 million user mark in June 2014. By 2018, it is estimated that mobile internet users will make up between 70-80 percent of India’s total online population, up from 60-70 percent in 2013.
Language: The share of vernacular language on the Internet is expected to grow from 45% in 2013 to 60% in 2018. The move will help bring more of India’s diverse user base as well as rural populations online.
Women: Women accounted for just 25% of India’s total Internet population in 2013, but it is expected that this number will grow to 33% by 2018. The change will trigger a shift in marketing strategies and services on the Internet, which will be directed more towards women.
Older Netizens: It is expected that the percentage of Internet users aged above 25 in urban India will grow to 54% by 2018, up from 40% in 2013. The likelihood in Internet based transactions is expected to grow because of this, as older users will have bigger disposable incomes.
Potential for GDP contribution
E-commerce: Online selling of products is expected to grow by 34% per annum to $75 billion by 2018. Along with this digital advertising too is expected to grow by 25%, while it is estimated that growth in the online content sector will be driven by paid apps.
Devices: Smartphones sales in India are expected to cross $17 billion in 2018, leading to a revenue gain of 20%. The shift towards smartphones will also boost internet use on mobile devices, with data contributing 18% of carrier revenues, up from 8% in 2013.
Internet transactions: Online payments are expected to grow by 20 percent by 2018, with an estimated 70 million people making use on online classifieds. The number of SMEs using the internet to make purchases and sell goods and services will grow from 3.5 million in 2013 to 8 million by 2018.
Infrastructure: It is expected that telecoms and other corporations will continue to invest in modernizing network infrastructure, at a steady 10% growth. Government spending will also grow at 20% to $3.5 billion.
The Internet related contribution to India’s GDP in 2013 was 3.2% at $60 billion, and is expected to rise to 4.6% to $160 million by 2018. The percentage of the country’s GDP powered by the Internet is already higher than most comparable developing nations, and by 2018 it will be on par with developed countries like Japan.