The entire report is here [1], but the key bits are below: Udhay
[1] http://www.mckinsey.com/locations/india/mckinseyonindia/pdf/Executive_Summary_Online_and_upcoming_The_Internet_impact_on_India.pdf <quote> Our report offers seven key findings concerning the impact of and outlook for the Internet in India: 1. India’s base of about 120 million Internet users is currently the third-largest in the world. Though India’s users spend less time online per capita than users in developed countries, their pattern of online behavior is rapidly converging. The Internet’s role in communication, social networking, and informing and influencing India’s consumers in categories such as apparel, books, financial services, and travel is already comparable with that of developed countries. 2. India is likely to have the second-largest user base in the world, and the largest in terms of incremental growth, with 330 million to 370 million Internet users in 2015. Given current downward trends in the costs of Internet access and mobile devices, India is on the verge of an Internet boom. In an evolution pattern unique to India, users who access the Internet only through a mobile or tablet device will constitute around 75 percent of new users and 55 percent of the aggregate user base in 2015, leading to increasing demand for content that is optimized for a small screen. 3. India has the potential to double its economic contribution from the Internet in the next three years, from 1.6 percent of GDP at present to 2.8 to 3.3 percent by 2015. Despite the large current base of users, the Internet currently contributes a modest 1.6 percent to India’s GDP, in line with most aspiring countries. This could grow to 2.8 to 3.3 percent by 2015 if India achieves its potential for growth in the number of Internet users and Internet technology related consumption and investment over this period, increasing the Internet’s contribution to GDP from $30 billion today to nearly $100 billion in 2015. This would make the Internet related economy larger than the education sector and as large as the health care sector, in terms of share of GDP at present. Currently, India’s information and communication technology (ICT) exports are the most significant component of the Internet’s impact on GDP. But private consumption, private investment and public investment have greater potential to grow in future. 4. The impact of the Internet in India is constrained by current gaps and obstacles in the Internet ecosystem. While India scores well on the availability of human and financial capital, it rates poorly on Internet infrastructure, Internet engagement, the e-commerce platform, the ease of Internet entrepreneurship, and the impact of e-governance. On most indicators of the strength of the Internet ecosystem, India ranks in the bottom quartile of our comparison set of 57 countries. 5. Although the Internet ecosystem is becoming more vibrant, the benefits have been relatively concentrated. India’s Internet startups are scaling up through creative adaptations to overcome infrastructural and systemic bottlenecks. Yet, while large enterprises have gained from their early adoption of the Internet, there is scope among individual consumers, SMEs and the government sector to significantly increase engagement. Today, India’s measurable consumer surplus from the Internet is estimated at $9 per user per month, at the low end of the range for aspiring countries ($9 to $26) and well below the range for developed countries ($18 to $28). Even by 2015, with overall Internet penetration likely to reach 28 percent, rural penetration is likely to be just 9 percent. 6. India can achieve broad-based Internet impact by aiming for the digital inclusion of nearly 40 percent of its population, to reach a user base of 500 million by 2015, rather than the likely target of 330 million to 370 million. Most of the additional 150 million to 160 million users would be individuals and small businesses in semi-urban and rural parts of the country. Extending Internet access to these segments of the population, and promoting the usage of many more online services, would enable India to derive much more of the intended benefits from government programs of inclusive growth in employment, education, health care, nutrition, and financial services. 7. Concerted actions by policy makers and businesses in five areas can help India achieve an inclusive Internet transformation: reduce the cost of Internet access across devices, content and applications; increase access to low-cost, high-speed connectivity in rural and semi-urban India beyond the top cities; promote widespread digital literacy through the introduction of devices and content tailored to the local context; devise Internet applications in new areas such as agriculture, health care, education, energy, utilities, and public information; and create a more favorable business environment for Internet entrepreneurs to support rapid innovation. </quote> -- ((Udhay Shankar N)) ((udhay @ pobox.com)) ((www.digeratus.com))
