The report found that the internet economy’s contribution to India’s technology sector will grow to 62 per cent from 48 per cent in 2022.
Jun 19, 2023
India’s internet economy is projected to grow to US$1 trillion by 2030 from US$175 billion in 2022, according to a joint report, released by Google, Temasek and Bain & Company.
Titled ‘The e-Conomy of a Billion Connected Indians’ the report says that the internet economy’s contribution to India’s technology sector will grow to 62 per cent from 48 per cent in 2022. It will also account for 12-13 per cent of India’s GDP, up from 4-5 per cent in 2022.
According to the report, the surge in the internet economy will be due to the rising digital demand in tier 2+ cities, digitization of traditional businesses, and the success of India Stack (Open Application Programming Interface and digital public goods).
Consumers in tier 2+ regions are more open to trying new brands and products and are willing to spend more on personalized and premium products, especially healthtech and edtech, the report highlighted.
Based on the surveys of consumers and investors, the report found that 82 per cent of tier 2+ consumers said that they were willing to pay higher prices for personalized and customized products and services, compared to 70 per cent nationwide. Similarly, 84 per cent of consumers in tier 2+ preferred an e-consultation over an in-person appointment, compared to 75 per cent in the rest of the country.
Healthtech and insurance tech, currently valued at less than US$2 billion, is expected to witness the largest growth of 9-15 times. SaaS (software as a service) will continue to drive India’s digital exports, while homegrown edtech and e-commerce platforms will gain more global traction, the report said.
Commenting on the report Sanjay Gupta, country head and vice president, of Google India, said, “Three foundational forces-deepening consumer digital adoption, technology investments by businesses, and digital democratization with the India Stack -has placed India at a turning point in its digital transformation.”
According to Vishesh Shrivastav, managing director, Investment (India), Temasek, “We expect trends in the consumer and digital space to provide a long runway for growth, and as a long-term investor, we are committed to providing catalytic capital to spur the development of innovative solutions.”
Agreeing with the report, Parijat Ghosh, managing partner of Bain and Company (India) said, “B2C e-commerce will drive 40 per cent of the digital GMV, followed by B2B sectors and SaaS.”