Till a few years ago, while India was adding well over 10 million new mobile subscriptions a month, there was no mention on the growth of the internet and broadband subscription base. That has changed and how. India’s internet subscription base at 354 million—according to the Internet and Mobile Association of India (IAMAI)—is more than the population of the US. It rose by 52 million (17%) in the first six months of 2015 alone. Growth picked up over the past few years—the last 100 million subscriptions were added in just a year while it took three years to go from 100 million to 200 million and 10 years to reach 100 million from 10 million. Since access to the internet in India is largely driven via the mobile phone, it is not surprising that over 60% (213 million) are mobile internet subscribers. But, that is where problems could arise as operators with limited spectrum may not be in a position to offer high-speed connectivity that users will expect and demand.
According to a study by ICRIER’s Rajat Kathuria, a 10% increase in internet penetration leads to GDP growing by 1.1%. The sharp increase in internet subscriptions could well be the driver for future growth in the economy. The good part is that the internet action is not restricted to urban India—138 million (39%) are rural subscribers. The rising number of rural mobile internet users has been driven primarily by the steady fall in the prices of smartphones coupled with low tariffs and the availability of a variety of local language content. The rural internet base could emerge as a critical tool for the implementation of the NDA government’s Digital India programme that plans to provide a suite of government services online. The rising internet base has already had a huge impact on digital commerce, which was valued at R81,525 crore in 2014, a 53% growth over 2013. It is estimated to touch R100,000 crore by the year-end. In urban India, the growth of the internet base has led to the growth of digital payments and e-commerce. The digital payments industry is pegged at R120,120 crore by IAMAI with 60% of that coming from the four metropolitan cities. Of course, further internet penetration, and the linked economic benefits, will only be possible if India puts in place a more liberal spectrum policy, one that puts more of spectrum on the block and allows for trading. Otherwise, the country will have to wait for a sharp upsurge in broadband connections for the next stage of growth to arrive.