The internet in India has taken more than 15 years to cross the 100-million user mark. Now, it's at the cusp of a giant leap. A rash of reports - from industry associations like Internet & Mobile Association of India (IAMAI) to global consultancies like Boston Consulting Group (BCG) - is heralding the dawn of the internet economy and a user base of 300 million in the next three years.
Consider this: In 2011 alone, investors poured $350 million into 57 internet startups - that's more than the collective dotcom investment of the past four years, according to VCCEdge, an Indian online deal platform.
Some $3 billion worth of e-commerce was transacted in 2011, says IAMAI. And, according to Helion Venture Partners, $20 billion worth of e-commerce will be done in five to seven years, with 12-15% of shopping going online in this period. Till date, however, the Indian Railways website for booking tickets is easily the most successful e-commerce model. Launched in 2002, irctc.co.in sold just 27 tickets online on its first day. Today, it sells 4 lakh. According to Verisign, an internet registry, about 2.6 million dotcom and 'dotin' companies are registered out of India. I
In 2012, the National Internet Exchange of India (NIXI), which manages the dotin registry and routes internet traffic in India, will launch 'dotbharat' domain names. Says Dr Govind, CEO, NIXI, "With a 100-million-plus user base, we anticipate rapid growth now." NIXI also plans to help get a web presence for 250,000 panchayats to ease delivery of citizen services from tax payments to registering births. Then there are social networking sites like Facebook andLinkedIn, which see India as their next growth frontier.
Each boasts 40 million and 12 million users, respectively, in India. And internet advertising, at $300 million, has already overtaken advertising on radio. The year ahead will see a rapid increase in user numbers-which stand at just 11 milllion now- but via mobile internet rather than fixed internet. That's due to a convergence of factors: cheaper mobile devices, 3G networks, greater adoption of dongles (a hardware that makes software run when plugged in) and Wi-Fi at homes. Telcos also see cyberspace as their next growth engine.
Says K Srinivas, president, consumer business, Bharti Airtel, "The next phase of growth for telcos will be data-driven. The internet is getting into the daily fabric of life-everything from videos and banking to healthcare and education will be delivered online." The rapid growth masks some challenges: not all e-commerce plays will survive. Says Sanjeev Aggarwal, senior MD, Helion Advisors: "E-commerce has too many moving parts: logistics, merchandising, customer experience... There will be a shakeout. Companies have to be careful about burning cash in ads or engaging in irrational price wars to bag
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