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India’s internet economy expected to double by 2020: BCG-TiE report

MUMBAI: With 391 million users, India has already become the second highest country in terms of mobile internet users. This is expected to grow rapidly to ~650 million mobile internet users by 2020. Data consumption could also potentially increase 10-14 times by 2020, according to a report.

The Boston Consulting Group (BCG), along with The Indus Entrepreneurs (TIE), today released a report titled ‘The $250 Billion Digital Volcano: Dormant No More’ that describes this phenomenal digital adoption in the country.

The impending digital salience can be seen from the following indicators:

  • High speed mobile internet adoption is set to reach 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 $125 billion to $250 billion, growing from the current 5% to 7.5% of the country’s GDP

The report reveals that while so far mobile internet users have proliferated and Smartphone users have gone up by four times, high speed internet users have still been limited only to ~56%. Thus, average data consumption per user continues to be low, standing at less than 1 GB data per month vis-a-vis developing economies like Indonesia and Brazil at 2–3 GB/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. Firstly, by 2020, 4G enabled devices are expected to grow 6 times to 550 million devices, constituting 70% 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,”said a BCG partner and report co-author Nimisha Jain.

Increased high speed internet adoption, the report says, is expected to increase 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.

TiE Delhi-NCR executive director Geetika Dayal said, “The report comes at a time, when the conversation has moved from ‘Internet of Things’ to ‘Internet of Everything’, and digitisation presents a great opportunity for multiple stakeholders.  Innovation is what leads to sustainability, and sustainable growth in the current entrepreneurship ecosystem will enable India to chart its own success story.”

India’s internet economy is expected to double to become $250 billion by 2020. E-commerce and financial services are projected to lead this growth. For instance, share of digital payment transactions could more than double to go up to 30–40% 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.

As the new digital paradigm emerges, adapting to change will become critical. For instance, the impact on jobs is expected to be transformational. Increased automation will minimise manual and repetitive roles while roles in upcoming spaces become coveted, e.g. human-machine interaction. Existing roles will also undergo transformation as low-value adding tasks get automated. New ways of working are expected to emerge with an increasingly flexible workforce optimising for efficiency. At the same time, genesis of new technology-led business models will give impetus to entrepreneurial activity and create new opportunities.