India’s Internet Services sector has the potential to emerge as a $124 billion business by 2022 from the current base of $33.8 billion, said a report titled “Economic Impact of Internet Services in India” released by the Internet and Mobile Association of India (IAMAI) on Tuesday.
Under a conservative estimate, the internet services market will reach $76.4 billion in next four years, however, the sector has the potential to close to double in value, said the study.
The sector currently employs 10 lakh employees and it is estimated to create 12 million net jobs by 2022.
India, by 2022, is expected to become a country of 1.4 billion people. With the proliferation of affordable internet connectivity, the number of internet users in the country is projected to increase 1.6x times from 481 million to reach 762 million in 2022, said the report. Along with increased availability of internet connectivity, the number of smartphone users in India too is estimated to grow at 1.75x times to reach 526 million in next four years. On the technology and business side of the Internet Services, internet will fundamentally change the way the needs, aspirations and demands of the consumers will be addressed. Pivoting on that, the sector is expected to witness plethora of changes in the future, the report said.
The report suggested that the sector can reach its potential $124 billion if certain critical factors are realised; such as forward looking and supportive government policies, better infrastructure for widespread internet connectivity, developed distribution network enabling better reach and connectivity to customers in Tier II/III cities for e-commerce, adoption of digital and advanced technologies across the ecosystem and offline sectors etc.
The report covered some of the identifiable internet services that have gained critical mass in the Indian economy such as e-tail, OTAs, Online Classified, Digital Advertising, Edu-tech, Food-tech, health-tech, Digital Entertainment (including online gaming), Fintech and Digital payments. Digital payments as a sector has been mapped but not included in the total estimate given the challenge of double counting, as it serves as a facilitator for many of the other services.
In the conservative estimates several sectors like agritech have not been included in the study as these are yet to gain any critical mass that could be used as benchmark for future projections. Similarly, new technologies like IoT, AI, M2M that are expected to shape the future of internet services too have been kept outside the ambit of this study because the real impact of these sectors are difficult to determine at present.
There are currently around 51 million SMEs in India, which contribute approximately 37% of the manufacturing output, 46% of exports and employ 117 million people. It has been observed that digitally enabled SMEs generate 2x revenues as compared to offline SMEs, attributed to the access to a wider base of customers, newer geographies/markets, additional sales channel etc. However, presently only 2% of these SMEs are digitally enabled. With advances in digitising existing offline businesses, the impact of the internet services can potentially be greater with newer service categories emerging in the near future.