India's Internet economy is expected to hit 10.8 trillion rupees (US$216 billion) by 2016, faster than major economies worldwide and is expected to rank fifth worldwide by 2016, a report by Boston Consulting Group (BCG) reveals.
According to the consulting firm's research released yesterday, the India Internet economy contributed to 3.2 trillion rupees (US$64 billion) to the overall economy in 2010--4.1 percent of the country's GDP--and could more than triple in four years' time.
India's Internet economy growth rate of 23 percent is ranked second across the G-20--Group of Twenty Finance Ministers and Central Bank Governors, and ahead of many developing nations, which are growing at an average of 17.8 percent.
India, along with Argentina will grow the fastest at 24 percent and 23 percent respectively, while leading developed markets Italy and the U.K. will grow approximately 12 percent and 11 percent per year respectively.
The report also noted that in the next four years, the total size of the G-20 Internet economy will be US$4.2 trillion, up from US$2.3 trillion in 2010. It is said to grow by about 8 percent annually in developed markets and faster in developing markets at 18 percent.
"If it were a national economy, it would rank in the world's top five, behind only the U.S., China, India, and Japan, and ahead of Germany," David Dean, BCG senior partner and co-author of the report, said in a statement.
"The Internet economy offers one of the world's few unfettered growth stories," Dean said. "Policymakers often cite GDP growth rates of around 10 percent per year in the developing markets, but they look past similar, or even higher, rates close to home."
High value to SMBs and consumers
The report also revealed that in many countries including China, Germany, Turkey and France, small and mediumsize business (SMBs) have engaged actively with consumers on the Internet and experienced three-year sales growth rates up to 22 percentage points higher than those of companies with low or no Internet presence.
Paul Zwillenberg, BCG partner and co-author of the report, noted in the statement that SMBs that embraced the Internet were growing faster and adding more jobs than those that did not. As such, by encouraging businesses to turn to the Internet, countries can improve their competitiveness and growth prospects, he said.
Connected consumers also value the Internet considerably. Zwillenberg explained that the value was calculated by how much consumers said that they would have to be paid to live without Internet access.
In G-20 countries, they had to be paid US$1,430 each, he revealed. The value varied among countries, from US$323 in Turkey to US$1,215 in South Africa to US$1,287 in France. The aggregate value across 13 of the G-20 countries had been US$1.9 trillion, approximately 4.4 percent of their GDP.