According to a joint research report, India’s Internet economy is poised to grow exponentially to a value of $1 trillion by 2030. The report adds that the adoption of digital tools and services driven by evolving consumer needs offers huge opportunities across sectors. E-commerce, fintech, edtech and more.
India is ushering in the ‘Digital Decade’, fueled by a steady transformation in consumer and merchant behaviour, bolstered by strong investor confidence. A study found that this trajectory could pave the way for the country to achieve a trillion-dollar consumer internet economy by 2030.
According to ‘India E-Conomy Report’ – jointly published by Google, Bain & Company and TemasekWith more than 700 million internet users in India, digital services have become an indispensable part of their lives. These include 350 million individuals who use digital payment platforms and 220 million who engage in online shopping.
As India experiences an extraordinary boom that will lead to a doubling of household consumption by 2030, digital commerce will inevitably become more deeply ingrained in the daily lives of Indians, the report stated.
The study draws on insights from Google, Temasek and Bain, as well as interviews with experts and industry insiders, and primary research.
According to the report, India is undergoing a “fundamental shift in income and consumption,” leading directly to growth spanning business-to-business (B2B) e-commerce, business-to-consumer (B2C) e-commerce, and software. -a-service (SaaS), online travel bookings, online media consumption, online food delivery, edtech, healthtech, insurtech etc.
According to the report, India leads the world in online video streaming, digital payments and time spent on social media, while trailing the US in overall time spent online per user per day.
The report also points out that over the past few years, Indian consumer habits have undergone significant changes – characterized by a widespread preference for digital interactions that signal a shift away from traditional methods; Convenience and value are becoming critical drivers of consumer choices; and sustainability. The report adds that digital adoption has reached a tipping point in most sectors of India’s internet economy, with 220 million people engaging in digital activities at least twice in the past 12 months.
Reportedly, this wave of change is not confined to the big cities. India’s tier 2+ (T2+) cities – with their significant population size, growing pool of internet users and their willingness to adopt digital-first habits – are playing a key role in driving this transformation. However, while the opportunities in T2+ cities are enormous, they also present significant challenges that require collaboration between government and the private sector.
As of 2022, India’s internet economy is estimated to be worth $155-175 billion, according to the report. It accounts for about 48 percent of India’s technology sector and 4-5 percent of the country’s GDP. The report predicts that by 2030, this value will increase to between $900 billion and $1 trillion, accounting for 62 percent of the technology sector and 12-13 percent of India’s GDP.
In addition, India Stack has played a critical role in enabling accessibility of public goods and services to citizens and businesses through digital platforms – key services such as Aadhaar, United Payment Interface (UPI) and DigiLocker have been instrumental in this. Facilitating the growth of India’s Internet economy.
These advances have paved the way for disruptive open networks such as Open Network for Digital Commerce (ONDC), Open Credit Enablement Network (OCEN) and Unified Health Interface (UHI), the report adds. These networks have opened up new opportunities for both established and emerging sectors, positioning them for potential future breakthroughs.
The report adds that the increasing adoption of digital tools and solutions by consumers and merchants has unlocked digital financial services for those who could not access credit through more traditional means. The report predicts that sub-sectors such as payments, loans, deposits and insurance can expect a compound annual growth rate (CAGR) of 8-14 percent between 2022 and 2030. The report indicates that there are more than five billion consumers. Business-to-business UPI transactions by the end of 2022 with over 50 million payment QR codes deployed at merchant outlets across the country.
During the same period, the report pointed out that five million online consumers used buy-now-pay-later platforms, a year-on-year (YoY) growth of 45 percent in the total number of digital loans disbursed.
All these factors, the report notes, will contribute to India becoming a trillion-dollar Internet economy by 2030. However, the report ends with a note of caution, stating that some challenges need to be addressed before this can be achieved:
According to the report, the booming Internet economy in India presents a lucrative opportunity for businesses to capitalize on its potential. To take full advantage of this opportunity, enterprises need to gain a deeper understanding of evolving customer needs and prioritize building stronger customer relationships, and leveraging digital technologies to optimize operational efficiency and drive business growth, the report says.
As digital transformation unfolds, it will bring unique challenges related to trust, security and accountability. Addressing these challenges will require collaboration between India’s policymakers and the private sector.
First Published: June 6, 2023 12:29 PM IST