Internet could contribute US$100B to India's GDP by 2015

Country is on the verge of an "Internet boom", and could see Web industry raise its contribution to GDP from 1.6 percent to 3.3 percent, but limited infrastructure will be key challenge.
Written by Jamie Yap, Contributor

The Internet industry's contribution to India's gross domestic product (GDP) could jump from the current 1.6 percent to between 2.8 percent and 3.3 percent by 2015.

Citing a new McKinsey & Company report, the Economic Times said Wednesday the increase from US$30 billion now to nearly US$100 billion in 2015 is provided India reaches its potential in growing the number of Web users and the level of Internet consumption and investment during that period.

At present, India is the world's third largest Internet market, with a Web user base of 120 million--a fraction of its population of 1.2 billion people. The number is set to grow up to 370 million by 2015, the report said.

It noted that given the falling costs of Internet access and mobile devices, India was "on the verge of an Internet boom". The country will likely have the second largest Internet user base in the world, and largest in terms of incremental growth.

As of 2011, China has 480 million Internet users, making it the world's most populous Web nation, followed by the United States which has 245 million users. And by 2015, the total number of Web users worldwide will become 2.66 billion up from 2.33 billion in 2011, McKinsey stated.

According to the report, India's ICT exports make up a significant part of the Internet's impact on GDP. However, private consumption as well as investment from private and public sectors have greater potential to grow in the future, it added.

India's Internet industry is also being limited by its current infrastructure.

"While India scores well on availability of human and financial capital, it rates poorly on Internet infrastructure, Internet engagement, e-commerce platform, ease of Internet entrepreneurship, and the impact of e-governance," said the report.

As much as the Internet ecosystem in India is becoming more vibrant, the benefits have been relatively concentrated and needs to be broader. This can be done by aiming for digital inclusion of nearly 40 percent of the country's population, which would grow the Web user base to hit 500 million by 2015, higher than the likely target of between 330 million and 370 million, McKinsey recommended.

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