Internet Contributes 3.2% to India’s GDP [Report]

It is no secret that the Internet drives business growth, even for companies that have a mainly offline presence. The Internet has emerged as a major game changer for businesses world wide in the last 15 years. But just how big is this growth story? A recent report published by McKinsey suggests that it may be more important than initially thought and more importantly its still growing. The report focuses on 13 countries ( G8; India, China and Brazil representing the emerging markets ; Sweden and South Korea for their high internet penetration).  With the evolution of ICT world wide, the Internet will become an even stronger and far reaching platform for business.

Here’s why you need to be online.

The contribution of the Internet to GDP:

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– The Internet has 3.4 % share of total GDP of the 13 countries that were studied. The share of the Internet in India with respect to its GDP is 3.2%, fairly close to the global average but still lower than it.

– Private consumption online is driven by purchase of goods and services by consumers through the Internet. India and China have the lowest Private consumption among the 13 countries.

– Trade Balance is the ( total export of goods, services and internet equipment along with B2C and B2B e-commerce)  minus ( internet related imports). The impact of the internet in India was powered by strong exports and contributed 47% to the Internet’s share in India’s GDP. 

– The spending by the government is the Public expenditure in the chart and you will see that the government spending accounts for only 5% of the Internet generated GDP.

The Internet supply ecosystem

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– The most positive statistic that we get to see is the growth of the ecosystem in India. Also notable was China’s growth in this report.

– The most disappointing India related statistic is also in the above chart with India scoring a 0 in R&D investment for the future.

What drives the ecosystem?

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Of the top 250 IT/Internet related companies in the world, 7  of them are Indian companies. They include Bharti Airtel, Infosys, HCl Technologies, Tata Consultancy Services, Wipro Limited, Idea Cellular and Reliance Communications

Not surprisingly, software/services and telecom have the biggest revenue across sectors in India.

Indicators of the rise of India

Bangalore, according to the report, has managed to achieve a growth rate previously unseen anywhere in the world and get almost 200 new Internet industry related patents every year.

The challenge for India is to capitalize on the human resources available in the country. And ofcourse, Investment in infrastructure development is a must for India to fully realise its growth potential.

What’s your take on Internet growth in India? Will mobile drive the growth?

– The report can be found here (warning: it’s a long report).

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