Six Must Know Facts About The Second Largest Internet Market: India

摘要: While growth of internet market is gradually declining both in China and around the world, India is the only exception. It is expected that the total number of mobile subscriptions in India will reach approximately 1.37 billion by 2021. What is the Indian internet market like? What problems are still hindering the development?

(Chinese Version)

“India is where China was five years ago”, “The turning point has come for the Indian internet industry”, “India has already become the second largest internet company around the world”… all these judgments on the Indian market helped make it the top choice for Chinese internet companies when they are eyeing on the overseas market.

Based on reports from various international research organizations, we carried out this article to help enterprise owners and investors better understand the Indian market and provide proper guidance in the decision-making process.

Fact One: The golden time for the global internet industry has gone

1. The global internet growth has slowed down

According to KPCB’s Internet Trends 2016 Report, there are 3 billion Internet users in the world, but the growth is gradually declining year by year. At the same time, the global internet penetration rate (the number of netizens to the total population around the world) is still on the rise.

2. China’s internet growth has slowed down too

China’s internet growth also slows down. Although the number of Chinese internet users has already reached 688 million, making China the largest internet user base in the world, growth rate of new internet users in China continued to slow down for these years (an increase of 7% in 2014, but an increase of 6% in 2015).

Fact Two: India has become the second largest internet market globally

1. India is the only place in the world where internet market continues to grow rapidly

According to Mary Meeker’s annual Internet Trends report, the total number of internet users reached 277 million as of 2015, an increase of 40% year on year. As a a matter of fact, the rapid internet growth in India contributes to 2% increase of the global penetration rate. Today, India has already become the second largest internet market globally, second to China. However, while the global internet penetration rate has already reached 42%, India’s internet penetration rate is only 22%, which is certainly at odds with Indian huge population and the high percentage of young Indians among its population.

Last August, India Times issued an article and predicted that India’s population was to reach 143 million by 2025, among which people under the age of 25 would account for 48% (690 million).

2. The number of India’s mobile internet users will reach 137 million by 2021

Globally, mobile devices have already become crucial in boosting internet penetration. This also applies in India. In October, 2015, the Internet and Mobile Association of India (IAMAI) and IMRB International co-issued the “Internet in India 2015” Report. According to the report, internet users who connect to the internet through mobile devices have already taken up 87% of the total internet users in India as of October, 2015.

Ericsson Mobility Report India edition predicted that by the end of 2021, the total number of mobile subscriptions in India was expected to reach approximately 1.37 billion, among which smartphone subscriptions would account for 810 million. In addition, the reports predicted that:

  • By 2021, 99% of India’s mobile traffic will be from data, and data traffic per active smartphone is expected to increase five-fold from 1.4GB per month in 2015 to 7GB per month;
  • Data speed is gaining more priority over network voice in determining smartphone users’ satisfaction with their network provider;
  • The majority of Indian mobile internet users live in cities (71%), but the number of mobile internet users in rural India will grow rapidly;
  • “Hunger for traffic” phenomenon will emerge among Indian smartphone users, and people will prefer to communicate with each other via the internet than voice mails;
  • The price of smartphones in the Indian market is generally low ($90~0), which will help the spread of smartphones and internet in India;
  • Music streaming and videos are the most popular forms of entertainment on smartphones.
  • WhatsApp Messenger is the top mobile app, in terms of the number of Indian consumers, followed by Google Search and YouTube.

3. India’s e-commerce market volume will reach $100 billion by 2020

Although India’s e-commerce market is still growing rapidly, it is still in the early stage. According to Internet in India 2015 Report, online communication, social networking, and entertainment are the main reasons why Indian internet users surf the internet. In addition, statistics suggest that 24% and 5% of India’s urban and rural population bought something online in 2014. At the same time, India’s e-commerce market volume only reached $12.5 billion in 2014, which is less than 3% than that of the Chinese e-commerce market.

The report also suggests that Indian internet users turn to e-commerce platforms mainly to buy clothes, internet software and medicine, etc. Insiders generally believe that India will become the next giant e-commerce market in the world. While Confederation of Indian Industry and Deloitte predicted that India’s e-commerce market would reach over $100 billion by 2020, Bank of America Merrill Lynch boldly predicted that India’s e-commerce volume would reach $220 billion by 2025.

Fact Three: An analysis of Indian internet users

1. The majority of Indian internet users are young and male

According to Internet in India 2015 Report, 32% of monthly active users in Indian cities are college students, while 75% of internet users in rural India are young people aged 18 to 30, 11% are youngsters under the age of 18, 8% at the age of 31 to 45.

At the same time, 71% of Indian internet users are male, while the rest 29% are female. Growth rate of male Indian internet users is 50%, while that of female internet users is 46%.

In addition, the average time Indian internet users surf the internet is 5.1 hours per day. Among internet users in urban India, 69% surf the internet almost every day.

2. Social networks: high preference for mobile platforms, still low penetration rate

As with the rest of the world, Indian internet users love social networks. In 2015, the average time Indian internet users use social networks has reached over two hours per day. Social networks such as Facebook, Twitter have already become an important component of Indian mainstream society, and their influence on Indian society is rapidly growing. Among all the social networks, Facebook is Indian internet users’ favorite, and over 53% of Indian internet users have used Facebook in 2015. Other social networks such as Twitter and Linkedin are also popular in India. At the same time, the penetration rate of instant message tool such as Whatsapp is also on the rise in India.

According to Internet in India 2015 Report, 72% of social network users sign in via mobile platforms, and that the average of Indian social network users is lower than the global average. Besides, half of Indian internet users are under the age of 23.

However, it is worth mentioning that although the number of Indian social network users continued to grow, only 10% of urban India population are connected to the social network, and it is expected that it will take 16 years for social networks to cover half of India’s population.

Fact Four: Internet user scale is small, but user potential is huge in rural India

According to IAMAI’s report, there are 188 million internet users in urban India, and only 46 million in rural India. However, there is huge untapped potential in rural India for internet market. IAMAI’s president Subho Ray once pointed out that although the urban Indian internet market was still not saturated, rural India would become the driving force of the growth of Indian internet market. In addition, he predicted that mobile internet would play a key role in rural India, and rural India would contribute 75% to the total growth of new internet users in India.

Face Five: Connection speed in India is below global average

The average connection speed in India is 2.8Mb per second, which is a little lower than the global average. Statistics suggest that average connection speed is the highest in South Korea (around 27Mb per second), while that figure for China, US, and Japan is 4.1Mb per second, 14.2Mb per second and 17Mb per second, respectively. In other words, if you download the same film in different countries, it will take you 20 minutes in China, 3 minutes in South Korea and 30 minutes in India. In addition, internet connection in houses and work places in India is very stable, but not quite stable when people are on the road, about which Indian internet users have complained a lot.

Face Six: Improvement should be made in five aspects

According to McKinsey’s report, consumption on the internet still contributes little to India’s GDP. Once consumption level of India consumers in internet and communication technologies reached that of developed countries, India’s internet industry’s contribution to GDP, as well its influence will rise threefold.

However, problems such as disparity between the rich and the poor, urban-rural gap, gap in educational resources as well as infrastructure will hinder the growth of internet economy in India. To boost the development of internet industry in India, related parties will have to make joint efforts in the following five aspects:

  • Improving internet infrastructure in rural India;
  • Lowering the cost for internet service;
  • Improving awareness of technology among public and penetration rate of technology products;
  • Connecting traditional industries such as agriculture, education, energy, health and public utility to the internet;
  • Providing a better environment for internet startups to grow and develop, encouraging innovation and nurturing internet giants.

At last, a fair top-down design by the government, adequate internet infrastructure by enterprises and high-quality products and services are all crucial in the growth of internet market in India.

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[The article is published and edited with authorization from the author @Zhudao, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.

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