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India’s Rapid Internet Adoption Quantified

July 21, 2015 - Written By David Steele

India is one of the fastest growing smartphone markets in the world and is set to become the second largest by sales volume by 2018, overtaking the United States of America but still behind China. Many of the world’s manufacturers are recognizing this significant growth and are scrambling to set up manufacturing plants in India in order to benefit from the government’s “Buy India” campaign. However, just how large is the Indian smartphone market? A report put together by the IAMAI and KPMG entitled “India On The Go – Mobile Internet Vision Report 2017” has sought to quantity the size of the Indian market, expecting there to be 236 million mobile Internet users by 2106, 314 million by 2017 and over 500 million by 2018.

There are a number of factors at work here, including decreasing smartphone prices, less expensive data plans by India’s domestic cellular carriers and the rollout of first 2G networks, then later on 3G and 4G LTE networks. When it comes to the mobile networks, the report estimates that there were only 82 million 3G subscribers in India at the end of 2014. This number is set to swell to 284 million by the end of 2017. Last month, there were 350 million Internet users in India, but this reflects a market penetration of just under 20%: the market is growing very quickly, driven by the adoption of mobile devices. It’s easy to see why: a smartphone is cheaper than most desktop computers, is considerably more portable and is not tied down to such restrictive infrastructure compared with a desktop computer or even a laptop.

One of the stumbling blocks is the relatively poor coverage of rural India. In 2012, just 0.4% of India’s rural population used a mobile device in order to access the Internet. This had tripled by 2014 to 4.4%, but this is still a small proportion of the population. As the carriers roll out their 2G networks across rural India and as the population become more Internet friendly, this should fuel rapid expansion. The reports concludes by stating that 3G and 4G LTE networks will continue to primarily be an urban phenomenon for the next few years as the carriers concentrate on the more densely packed areas and will defer the rollout of the higher performance data networks until market penetration is higher.