India 2015: MARKET CHARACTERISTICS | Smart Cities / Internet
Internet penetration takes off, after lagging other countries
Indian Internet users totaled 269 million in June 2015, according to the Internet and Mobile Association of India (IAMAI). That’s almost the same number of Internet users as the US but only about one-fifth of India’s population, which indicates the market’s huge potential.
In fact, the number of Indian Internet users, which grew from just 7 million in 2001, is projected to reach 580 million in 2018, IAMAI concluded in a recent report. Most significantly, the composition of the new Internet users will come predominantly from small towns and rural India. Users will be older, more female and more likely to access the Internet with a mobile device and communicate in Hindi or a local language.
The report predicts that India’s Internet economy could reach $200 billion, or 5 percent of GNP, by 2020. The implications for brands across categories are enormous. India’s E-commerce business is in its infancy, totaling just $13.5 billion in 2014, according to IAMAI and the Indian Market Research Bureau (IMRB).
India has lagged behind much of the world in Internet penetration until now. Many factors are expected to drive
rapid Internet expansion, including entrepreneurial activity by brands and the availability of low cost smart phones. But the greatest enabler may be the investment being made by the Indian government.
To bridge India’s urban-rural divide and provide the electronic infrastructure required for a digitally empowered economy, the government of India launched the National Optical Fibre Network (NOFN) in 2011, to connect 250,000 villages with fiber optic cable by 2016.
To implement the project, NOFN, now called BharatNet, the government set up a special agency, the Bharat Broadband Network Limited (BBNL). When it’s completed, the broadband network is expected to provide even India’s smallest villages with greater access to online commerce, education, health care and government services.
The question is when the enormous project will be completed. Execution has been slower than planned and over budget. In a revised and accelerated schedule, BharatNet expects to rollout optical fiber to 50,000 villages by December 2015.