India’s Internet economy to reach Rs 10.8 trillion by 2016: BCG

PTI New Delhi | Updated on March 19, 2012 Published on March 19, 2012

India’s Internet economy is expected to reach Rs 10.8 trillion by 2016, as the country’s growth rate in this segment is far ahead of many of the developing nations, says a report by Boston Consulting Group.

According to a report in the Boston Consulting Group’s Connected World series, the Indian Internet economy contributed Rs 3.2 trillion to the overall economy in 2010, representing 4.1 per cent of GDP, and is projected to rise to Rs 10.8 trillion by 2016.

Meanwhile, in the next four years, the total size of the G-20 Internet economy will be $4.2 trillion, up from $2.3 trillion in 2010.

India’s Internet economy growth rate of 23 per cent places it as the second fastest across the G—20 and ahead of many other developing nations in the G—20, which are growing at an average of 17.8 per cent.

Projected growth rates elsewhere are: 24.3 per cent in Argentina, 18.3 per cent (Russia) and 15.6 per cent (Mexico).

The report further said had it (Internet) been a sector, it would have been the eighth largest sector in India, larger than mining and utilities.

While, consumption is the principal driver of Internet GDP in most countries, the situation is somewhat different in case of India.

In India Internet economy is driven especially by exports of IT services: net exports make up 59 per cent of the Indian Internet economy, while consumption is only 20 per cent.

“China and India stand out for their enormous Internet related exports— China in goods, India in services — which propel their Internet—economy rankings toward the top of the chart,” BCG Partner, Mr Arvind Subramanian said.

Commenting on the findings, Mr Rajan Anandan, VP — Sales and Operations & Managing Director, Google India, said, “India is seeing one of the fastest rates of Internet adoption across the globe. We see emerging opportunities for innovation in areas like mobile, e—commerce and cloud.”

The BCG report noted “High web” companies in India — ones that use the Internet for marketing, sales and interactions with customers and suppliers — grew their revenues 19 per cent over the past three years, compared to only 13 per cent for those who made low or no use of the Internet.

“Around the world SMEs which embrace the Internet are growing faster and adding more jobs than those that don’t. By encouraging businesses to adopt the Internet, countries can improve their competitiveness and growth prospects,” said Mr David Dean, BCG Senior Partner and co-author of the report.

Published on March 19, 2012
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