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News Heading  : Indian internet industry worth $4.2 trillion

Post Date : 2012-03-21

News Source : Times Of India

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News Details  :

MUMBAI: Internet may after all be more addictive than alcohol, at least in India, where more than two thirds - 71% - of those who participated in a survey by global management consultancy firm Boston Consulting Group (BCG), is willing to let go of alcohol for internet access.

About 64% would sacrifice chocolate for internet access.

Such user interest and participation is driving the India's socalled Internet industry to Rs 10.8 trillion by 2016 or about to 5.6% to the country's gross domestic product (GDP). This compares to about Rs 3.2 trillion in 2010 or about 4.1% of the GDP.

If the Internet industry was counted as a separate sector, it would be eighth largest in Indian economy - larger than mining and utilities - according to BCG's latest report, The $4.2 Trillion Opportunity: The Internet Economy in G-20.

To be sure, BCG counts India's IT services exports as part of the internet economy, constituting the largest chunk - about 59% - while actual internet consumption makes up only 20% of the sector.

Growing at 23% annually, India's internet economy is the second fastest growing one in G20 countries, ahead of Russia and Mexico.

"Consumption is the principal driver of Internet GDP in most countries, typically representing more than 50% of the total in 2010. It will remain the largest single driver through 2016," said Arvind Subramanian, a partner at BCG.

"China and India stand out for their enormous Internet related exports- China in goods, India in services." BCG says the numbers still does not capture everything, especially with early Internet users researching online but purchasing offline in the end. Typically in India, this is prevalent when it comes to purchase of technology products including electronic gadgets.

"In retail alone, G-20 consumers researched online and then purchased offline more then $1.3trillion in goods in 2010 - the equivalent of 7.8% of consumer spend or more than $900 per connected consumer," the report said.

As the ecosystem and user behaviour matures, especially with improvements in infrastructure, credit card usage, and consumer confidence in online payment, such deals are expected to get completed online. Increasing penetration of mobile devices, such as smartphones and tablet computers, is expected to impact online retail and e-commerce, further blurring the line between online and offline buying, BCG analysts said.

In 2010, online retail constituted just 0.9% of India's total retailing done in India and it is expected to grow to 4.5% by 2016.

By 2016, the Internet economy in the EU-27 and India will leapfrog into fourth and fifth place, respectively while Japan and the US will grow more slowly and drop to sixth and seventh place respectively.

 
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