India’s Internet Economy To Hit $1 Trillion Mark By 2030 With GDP Contribution Of Around 12%: Google Joint Report

India's internet economy is poised for extraordinary growth, with a projected valuation of $1 trillion by 2030, according to a joint report by Google, Temasek, and Bain & Company.

Google joint report highlights India's internet economy based on evolving consumer behavior, digitisation and success of digital public goods.

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India's rapidly expanding internet economy is anticipated to reach a staggering valuation of $1 trillion by 2030, a significant surge from the estimated $175 billion in 2022. As a result, the contribution of the Internet economy to India’s GDP will increase from 4 to 5 per cent, as of now, to around 12 to 15 per cent.  The "e-Conomy India 2023" report, a collaboration between Google, Temasek, and Bain & Company, underscores the shifting consumer behaviour and evolving business landscape driving this momentous growth.

The report, released on Tuesday, highlights three key factors that will propel the Internet economy in the years ahead.

1. Digital-seeking behavior in Tier 2 cities and beyond: The increasing inclination toward digital technology in Tier 2 locations and beyond is set to fuel the growth of the Internet economy. Users in these areas are displaying a greater willingness to experiment with new brands and products, driving demand for personalized and customized offerings.
2. Digitisation of traditional businesses and thriving startup ecosystem: Established traditional businesses embracing digitisation, combined with the thriving startup ecosystem, are contributing to the expansion of India's internet economy. This shift towards digital transformation is unlocking new opportunities and enhancing competitiveness.
3. Success of India's digital public goods: The 'India Stack,' the country's indigenous digital public goods, has played a vital role in accelerating the growth of the internet economy. By providing a robust digital infrastructure, the India Stack has facilitated seamless transactions, increased accessibility, and enhanced the overall digital experience for users.

Impact On GDP And Technology Sector

The Internet economy's contribution to India's GDP is expected to rise from the current 4-5 per cent to nearly 12-13 per cent by 2030. Moreover, the technology sector is projected to witness a significant expansion, with the internet economy's share increasing from 48 per cent to 62 per cent during the same period, according to the report.

Consumer Trends

With approximately 700 million internet users in India, the report highlights the country's increasing reliance on real-time digital payments, online video streaming services, and social media platforms, surpassing global averages. The anticipated growth of the Internet economy will be underpinned by a doubling of household incomes by 2030, from around $2,500 to $5,500.

The report further reveals that consumers in tier 2 and above cities are more open to experimenting with new brands and are willing to pay higher prices for personalized and customized products and services. Additionally, 84 per cent of consumers in these cities prefer e-consultations with reputable doctors over in-person appointments recommended by friends or family, compared to the national average of 75 per cent.

Sector-Specific Projections

Among the ten key consumer sectors, Business-to-Consumer (B2C) e-commerce is expected to maintain its leading position in digital services, projected to grow five to six times and reach approximately $350-380 billion by 2030. HealthTech and InsurTech, currently valued at or below $2 billion, are expected to demonstrate the largest expansion, increasing by 9-15 times.

The report also forecasts a doubling of online shoppers in India by 2030, with over 60 per cent of new shoppers emerging from smaller towns. These consumers are increasingly drawn to the convenience and accessibility features offered by digital platforms, particularly Direct-to-Customers (D2C) offerings.

In conclusion, India's internet economy is poised for remarkable growth, with a projected valuation of $1 trillion by 2030. The "e-Conomy India 2023" report underscores the crucial role of changing consumer behaviour, evolving business ecosystems, and the success of digital public goods in driving this exponential growth.

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