India’s Internet Economy Expected to Reach USD 250 Billion by the End of 2020

India, with over 391 million users is currently the second highest country in terms of mobile internet users. The same number is expected to hit or even go beyond 650 million by 2020, according to a report released by Boston Consulting Group (BCG), along with The Indus Entrepreneurs (TIE). The report is named as ‘The $250 Billion Digital Volcano: Dormant No More,’ which describes this phenomenal digital adoption in the country.

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The report also says that the data consumption could potentially increase 10-14 times by 2020. The impending digital salience can be seen from the following indicators:

  • High-speed mobile internet adoption is set to reach over 550 million users by 2020, almost 85% of the total mobile internet users.
  • Average data consumption is projected to reach 7-10 GB per user per month by 2020.
  • India’s internet economy is expected to double from USD 125 billion to USD 250 billion, growing from the current 5 percent to 7.5 percent of the country’s GDP.

The report reveals that mobile internet users proliferated with smartphone users growing up by four times, high-speed internet users have still been limited only to 56 percent. Thus, average data consumption per user continues to be low, standing at less than 1 GB data per month with regards to developing economies like Indonesia and Brazil at 2–3GB/month and developed economies like Japan and US at 9–11 GB/month. However, the situation is about to change.

“It is essential to understand the three forces that are now synergizing to unlock internet consumption in India,” said Nimisha Jain, a BCG partner, and report co-author. “Firstly, by 2020, 4G enabled devices are expected to grow six times to 550 million devices, constituting 70 percent devices in use. Secondly, reliable high-speed data is becoming both ubiquitous as well as mass affordable (data rates have reduced to less than one-third in just 4–5 months). Lastly, digital content is proliferating as well as improving in quality, thus driving consumption.”

Increased high-speed internet adoption, the report says, is expected to increase the amount of time spent online by 2020 to almost 3-4 times. Moreover, the amount of video consumed online is on the rise especially driven by online media and entertainment. As internet access ceases to be a constraint, consumers will become more quality conscious, resulting in an increase in the average video resolution. Driven by these changes in online consumption, average data consumption per user is set to increase by 10-14 times by 2020.

E-commerce and financial services are projected to lead this growth. For instance, the share of digital payment transactions could more than double to go up to 30–40 percent by 2020. Digital economy will have a much broader influence beyond the direct economic impact. Digital adoption will deliver several citizen-centric social benefits like enhancing ease of doing business, improving access to services and products and transforming governance.

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Pritam
April 8, 2017 11:28 am 11:28 AM

I’m not a fan boy but what Reliance Jio is doing to India’s Telecom market will go down in history. One single company has caused India’s Internet usage to go up by many folds. Rural areas like where I live do not have broadband connection but inexpensive cellular connectivity has made all of us use many many gigabytes of data every month that we would never have any way without Jio.

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