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India to have 550 million Internet users by 2018: Report

By Satrajit Sen , afaqs!, New Delhi | In Digital | January 16, 2015
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The number of Internet users in rural areas will touch 210 million by 2018.

In 2001, there were approximately seven million Internet users in India. This number has grown by 25 times in the last 12 years at a compounded rate of over 30 per cent year on year. Today, 40 million Indians are online everyday, spending 40-45 hours over the Internet per month. India is the second largest market for social networking giants such as Facebook and LinkedIn - 58,000 new users get connected on to a social network every day.

That is not all. The IAMAI and The Boston Consulting Group (BCG) report India@Digital.Bharat establishes that India is headed towards an Internet economy worth $200 billion by 2020, that will contribute to 5 per cent of the GDP growing at 23 per cent compared to the overall 13 per cent.

Indian Internet Population Growth

The report states that the number of internet users in rural areas will touch 210 million by 2018, pushing India's internet user base to over 500 million. The report further states that the number of people accessing the Internet in India will jump from 190 million as of June 2014 to over 550 million in 2018. This will be made possible through near universal 2G reach, improved 3G and government intervention on such key issues as public access, connectivity costs, and consumer awareness.

Assuming the aggressive execution of government interventions on all fronts, the urban Internet population will increase from 130 million in June 2014 to 300 million by 2018. The real action, however, is set to unravel in rural India, where the Internet user base is likely to expand by up to 40 per cent per annum, from a comparatively low base of 60 million as of June 2014 to 280 million in 2018.

Changing face of the Indian Internet user

Internet Users Demographics

The next wave of growth in India's online population, says the report, is expected to give rise to a user base that will be significantly different from the current Internet user group, along multiple dimensions - be it in terms of geography, demographics, access device, or content medium. The class of 2018 will be more rural, older, more gender-equal, more mobile and more regional than their counterparts of today. The rapid growth in the Internet population since 2009 has largely been driven by India's youth (defined as those less than 25 years of age). Even as these early evangelists grow older they will continue to be active online, boosting the ranks of Internet users aged 25-plus. Those under 25 will account for 54 per cent of the total number of netizens in urban India by 2018, up from 40 per cent in 2013. With older Internet users having more disposable income, they will be more likely to transact more online creating business opportunities for e-commerce players and other service providers.

Gender balance

The report further analyses that over the years, the skew in favour of males with regard to India's Internet population has been rather overwhelming with females accounting for a meagre 25 per cent (approximately) of the total user base in 2013. However, this vital aspect of the demographics playbook will also change dramatically, with women expected to constitute almost 33 per cent of the overall online population by 2018.

The increasing parity in gender ratios will have a major bearing on the Internet economy - in terms of marketing campaigns and other services directed at women -considering that women control 44 per cent of the total household spend in India.

Mobile

If the tripling of India's Internet user base between 2009 and 2013 was remarkable, then the rate of growth of the mobile Internet population has been truly spectacular. The number of individuals accessing the Internet from cell phones and tablets virtually doubled in the year ended June 2013, from 50 million to 90 million, and is estimated to soar to 185 million by June 2014. This clearly underscores the fact that a majority of Indians embracing the Internet, particularly rural consumers, have simply bypassed the PC, and are using mobile devices to get online on the go.

Mobile Internet users are likely to constitute between 70 per cent and 80 per cent of the total online population by 2018, compared to 60-70 per cent in 2013. One important dynamic of this secular trend is that 70 per cent of rural users access the Internet from their mobile handsets.

Regional language card

One major enabler in this regard could be the increasing use of content in regional languages to deliver information and other services over the Internet. As an ever more diverse base of users, including rural netizens, gets on to the Internet, they may increasingly opt to access it in their native language.

The use of regional language content online is estimated to increase from 45 per cent in 2013 to more than 60 per cent in 2018, mirroring consumption patterns in mainstream media such as print and television.

Developing a comprehensive digital strategy

Digital Strategy for Companies

Companies and brands can accelerate the Internet's evolution through understanding consumer digital behaviour, keeping abreast of the evolutionary impact of the Internet on consumers' lives and how it affects all aspects of their daily behaviour.

Impact of Internet on GDP

Challenges in Internet Growth

They also have to expand digital capabilities to capitalise on the increase in mobile usage as well as build the right digital platforms in the form of websites and mobile apps. Marketing strategies will need to develop around changing consumer behaviour, evolving dynamics of Internet usage and the demographic shifts in the Internet user base.

Currently most advertising and marketing spends are concentrated on offline media; the online channel as an advertising and distribution/sales medium is mostly ignored. An effective balance and integration of online and offline channels will be important for an overall digital strategy.

Alpesh Shah, senior partner and director, BCG, says, "India will have more than half a billion internet users in the next three years - this growth has the potential to fundamentally change the way in which consumers save, learn, play, move and work. However, the extent of shift will depend a lot on how the government and the industry come together to unlock the true potential of the internet."

Earlier, delivering the inaugural address, Rajan Anandan, chairman, IAMAI and managing director, Google India, stressed on the growth of internet in India and successful rollout of the government's digital India programme. He said, "India is the third country in the world to have over five internet companies valued at over $1 billion. India is the fastest growing internet country but we need to move from narrow band to broadband at the earliest."

India Digital Summit is IAMAI's flagship annual event and has achieved great success and popularity in last few years. The Summit is attended by more than 800 delegates over two days, representing CEOs and senior executives, brand managers, publishers, advertisers, marketers or business owners, government officials, NGOs and evangelists from across sectors.

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