5 mins read . 07 Jun 2023
A recent report, jointly authored by Google, Bain and Temasek has made some very interesting projections about the size of the internet economy in India. They are expecting exponential growth in the Internet economy over the next few years and they expect the Internet economy in India to touch $1 trillion by the year 2030. That is a nearly 6-fold growth in the internet economy from the current levels. The growth is likely to be driven by e-commerce verticals. The report has noted that few countries in their internet journey have shown the speed and willingness of India to internet adoption. India already has over 70 crore internet users, of which 50% are accounted for by digital payments and 30% by online shoppers. The rest are spread out.
One of the big bets in the report is that household consumption in India could double by the year 2030, which is a CAGR growth of about 10% from here. The growth in household consumption is likely to be in sync with the growth in B2C e-commerce, which is also expected to grow 6-fold by 2030. The overall internet economy currently stands at $175 billion and by 2030 it is expected to be up by 500% at $1 trillion. By 2030, the GMV (gross market value) of B2C Ecommerce is likely to account for $380 billion or about 38% of the total internet economy in India. This period is also likely to see wider acceptance of digital tools and solutions by consumers and also by merchants.
It is not just B2C e-commerce that will drive the growth of the Internet economy. Even B2B e-commerce is expected to grow by about 1,300% by 2030 to $120 billion and would be largely driven by the SAAS segment. The proliferation of closed user group networks supported by 5G networks is likely to be a big boost for the B2B e-commerce in India. In fact, 5G usage is likely to be a big boost for B2B e-commerce as it entails volumes and large data flows. Hence the success of the 5G rollout which is currently being undertaken by the leading telecom companies, will hold the key to this aspect of the internet economy growth in India.
The report highlights that it is not just the internet penetration and internet adoption that are special about India. If one takes a granular break-up of online transactions and interactions, the numbers are quite revealing. It is estimated that over 22 crore people shopped online in India, while over 11 crore Indians made purchases from online gaming sites. There are more interesting statistics. More than 6.5 crore Indians ordered food and beverages online while another 8 crore persons paid utility bills on the Internet. A smaller but important 2.5 crore people used ride-hailing services online while another 1.5 crore people signed up for online education courses. Indians have been splurging on the internet across the spectrum, and this is likely to only grow.
However, the journey to a $1 trillion internet economy is going to be a lot tougher. For instance, the bulk of the growth will have to come from the tier-2 and tier-3 cities. However, the internet infrastructure in most of these places does not match up to the metros. To handle such an explosion in internet commerce, the efforts on cybersecurity, data integrity and storage have to be substantial and here is where the government will also have to chip in. But, as the report points out, the growth in the internet economy in India is going to be the big story of the decade.
Content Source: Financial Express