The Future of internet in India

The Future of internet in India report is released by National Association of Software & Services Companies (NASSCOM) with the aim to understand the impact of the internet on the way people live, learn, work, shop and connect; and focuses on the future trends that will change the landscape of India by 2020.
Highlights of the report:

• India is expected to have 730 million internet users by 2020, with 75% of new user growth expected to come from rural areas
• India’s internet user base is the second largest after China. Globally, the number of internet users is expected to touch 4,170 million by 2020. The growth of the internet has successfully created a strong ecosystem for new businesses to tap into growing markets and create solutions to address their demands.
• Overall e-commerce market in India was valued $17 billion in FY 2016, and by 2020, India will have an estimated 702 million smartphones in use and mobile phones will emerge as the preferred device for shopping, accounting for 70% of total online shopping.
• The fashion and lifestyle segment will emerge as the largest e-tailing category with a 35% contribution to e-commerce gross merchandise value, or GMV, by 2020, overtaking the consumer electronics segment which dominates the sales of Indian e-commerce industry at present.
• Non-travel related transactions account for the remaining 39%, of which e-tailing accounts for 76%. Further, e-tailing has grown 93% year-on-year, with the top three e-tailing giants (Flipkart, Snapdeal and Amazon) accounting for over 80% of the segment in 2015. By 2020, e-commerce is likely to double to $34 billion, mainly driven by the growth in the online retail space, as per the Nasscom report.
• Travel across India, for social visits, leisure, shopping and holidays is all set to increase and more people will be booking online, taking advantage of competitive pricing offered by online travel agents and aggregators.
• The chief new medium of personal entertainment that has emerged is undoubtedly OTT, which stands for over-the-top, a term used to describe the delivery of entertainment—including TV programmes and movies—via the internet, without having to subscribe to a cable or satellite TV provider.
• According to a Media Partner Asia (MPA) report, India had 12 million active OTT video subscribers in 2014. And given the launch of several personal entertainment apps from large media houses since then, the number of subscribers has been steadily increasing.
• As on January 2015, as per TRAI, SMS traffic in India fell to 4,367 million in June 2014 from 5,346 million in June 2013, a decline of 18.3%, and is likely to show further decline year-on-year.
• Cash-on-delivery may remain the preferred mode of payment for newer users, keep in mind that use of mobile banking and e-wallets is surging.
• The government’s push for financial inclusion (e.g. Jan Dhan Yojana) will help fintech companies become data-rich, strengthening the unique national identity system (Aadhaar) and the ubiquity of mobile phones in India. Indeed, a large clutch of fintech companies are working on making sense of dark data and making it usable for the benefit of the larger population.

Analysis:

• Multiple stakeholders will need to work in tandem to bring the next generation of internet users (rural, mobile-centric, and local-language consumers) online in India.
• While the Government’s Digital India initiative aims to deploy the National Optical Fibre Network (NOFN) providing broadband connectivity to cover 250,000 gram panchayats, the onus of bringing this internet to end users falls on telecommunication and technology companies.
• The NOFN will have to be linked with telecom towers to deliver wireless broadband services to rural households, but setting up telecom infrastructure in remote areas remains a challenge. So companies such as Google, Facebook, and Microsoft are coming up with unconventional methods. While Google wants to use a network of Helium balloons to relay signals to remote areas, Facebook plans to use drones as an alternative. Microsoft plans to use unused spectrum in frequencies used by TV channels to carry data.
• India’s Internet consumption has already exceeded the U.S. to become number two globally. By 2020, the Internet is expected to penetrate deeper in the hinterlands of the country, helping create more opportunities for everyone. This will also present a great opportunity for enterprises to harness the power of the Internet to innovate and scale up operations.

By: Vishal