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Internet-driven economy to grow by Rs 10 trillion in 3 years: IAMAI report

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Internet-driven economy to grow by Rs 10 trillion in 3 years: IAMAI report

India’s internet driven-economy is expected to grow by over Rs 10 trillion by 2018, according to a recent report launched by Internet and Mobile Association of India (IAMAI) in collaboration with Boston Consulting Group (BCG).

The nation’s internet economy, which was about Rs 3.6 trillion in 2013, contributed 3.2 per cent to the GDP, the largest among the developing countries and sixth largest globally, the report said. About half the population in the nation, will be online in the next three years, irrespective of the demographic.

Consumer-driven growth

“The report is based on a survey that was done over three years. It included 25,000 consumers and over 100 product categories,” said Alpesh Shah, senior partner and managing director, BCG. “We looked at how consumers are doing information search and purchasing online. What stood out was the driver behind the growth of the Internet base. It wasn’t only the younger demography, but also the older generation migrating to the digital platform. With growing aspirations, there were more people coming online from rural India as well as more women as compared to before,” said Shah.

Entrepreneurial explosion

Rajan Anandan, managing director at Google India and chairman of IAMAI stated that the last year was very good for the industry—with a new government, explosive growth in the mobile start-ups and rise of the e-commerce companies. “E-commerce companies’ revenues were in excess of Rs 25,000 crore at the end of the year,” he said. “Six years back, there was no single billion-dollar Internet company in India; now there are seven of them.”

“They comprise three public companies, Info Edge (India), MakeMyTrip and Justdial, and four private companies—Flipkart,, and There are only three countries, which have more than five Internet companies with billion dollar valuation, India being the third one behind the US and China,” Anandan added.

The country also saw a 10-fold increase in the venture funding that went into Internet companies in 2014 as compared to 2013. More than 800 Internet start-ups got funding in 2014 as compared to 200 in 2012, said Anandan.

Government push

According to Communications and IT Minister Ravi Shankar Prasad, “Faster computer literacy in India can help the internet economy touch $200 billion by 2020 to contribute five percent of the country's GDP.”

“For the internet economy to touch $200 billion by 2020 that will contribute five per cent of GDP, we need to move at a fast pace towards computer literacy. The other key areas which will help the internet economy to grow is mobile internet. The government is committed to digitisation and we look at extensive PPP to have successful implementation,” he said.

“India’s growth is interlinked to the Digital India programme. The government is dedicated to creating a digital ecosystem that will enable internet to touch the lives of all Indians,” he said.

“We need to look at creating hubs in rural India that will help grow e-commerce, which remains unexplored so far. Unless connectivity reaches every village of India, the dynamics of growth will remain unchanged,” the minister added.

2015 targets

The industry is looking at three main areas this year, according to Anandan. First is building Indian language or vernacular Internet; second, accelerating the mobile app ecosystem; and third, making sure the Internet continues to be free and neutral. At present, though there are three million software engineers in the country, Google’s Play store features only one Indian mobile app among top 100 apps.

A report published by Internet & Mobile Association of India and IMRB International suggests that the number of mobile internet users in India is expected to reach 213 million by June this year.

The report, titled “Mobile Internet in India 2014″, stated that the number of mobile internet users in the country stood at 173 million by the end of 2014. The study predicts that mobile internet users in rural areas may increase up to 49 million by March 2015 and 53 million by June 2015. That shows a steady growth of 33 per cent from October last year.

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