'Bharat' to be locus of boom as Internet economy heads for $1 trillion mark by 2030

Forget digital divide, 'Bharat is the new locus of digital growth' claim experts. The lines between digital haves and have nots in India is fast dissolving  and the so called 'digital divide' which was commonplace in Indian economic parlance a decade ago could soon be a gone story. The recently released report by Bain & Company in collaboration with Google and Tamasek which states that the Indian internet economy is poised to become a $1 trillion by 2030 has highlighted the accelerated pace at which India's tier 2 and tier 3 cities are participating in the internet economy. 

As per the report, India's internet economy is expected to grow six-fold from its $175 billion valuation in 2022.  The e-Conomy of a Billion Connected Indians report said that the internet economy's contribution to India's technology sector will jump to 62 per cent in 2030 from 48 per cent in 2022. It will also account for 12-13 per cent of India's GDP, an increase from 4-5 per cent in 2022, says the report. This boom is likely to see India's rank as an investment destination rising in the upcoming days.  The sectors which are likely to see maximum benefit are software, fintech, and B2C/B2B e-commerce. While the number of online shoppers are likely to double, more than 60 per cent of new shoppers will be located in smaller towns. Household income too is expected to rise and double up by 2030.

India's internet usage snapshot

India currently has over 700 milion internet users; 350 million digital payment users and 220 million online shoppers. These numbers are expected to grow exponentially as India's household income continues to rise.

'Bharat' is the new locus of growth

"The internet revolution is sweeping through tier 2 and tier 3 cities in India and we are seeing a massive surge in a new segment of consumers who are inclining toward the internet economy. Further, evolving consumer behaviour, especially on social media has made the previously closed Indian consumers to open up to global tastes and aspirations. A significant part of this growth can also be attributed to the increased tech investments by Indian and global businesses underscored by superior infrastructure and skilled workforce in the region," Gurjodhpal Singh, CEO, Tide India told Republic.

"Bharat is now emerging as new locus of growth. This is also contributing significant to the emergence of digital equality in the country. At Tide, we are seeing nearly 90 per cent demand for the digital business financial platform from members in tier 2 and 3 regions, such as Jaipur, Amravati, Muzaffarpur, Bhopal, and Alwar, among others. India’s digital infrastructure is robust, exemplified by the successful onboarding of all members through video KYC, with a significant portion hailing from tier 2 and 3 cities. As we go forward, we will see the digital disruption trickling across various areas such as healthcare, finance, transportation, and education. With the advancements in technology, we can expect to see more personalised and efficient services in these industries."

Raja Debnath, Managing Director and Co-founder, Veefin,  a global supply chain finance platform says, “Sustained initiatives by the government and businesses over the many years now have resulted in the ‘Digital Literacy’ dividend that is making world leaders look to India for opportunities. With a maturing market, the growth of digital economy is taking roots from what everyone calls the next growth geography or ‘Bharat’. The rising aspiration class being met with affordable smartphones and cheap data has turned tier 2 and 3 cities into very promising markets." 

He adds, "While the trend is more pronounced in B2C sector, with digital literacy percolating in India’s hinterland, a similar wave of digital adoption in the B2B space is not far away. India’s MSMEs, the backbone of our own $5tn economic vision, have shown high acceptance of digital technology. MSMEs are now driving Bharat. The increasing number of MSMEs expressing interest in embracing digital platforms makes it more economically viable for lenders to provide their services. Veefin believes that Supply Chain Finance will be a highly promising area going ahead. As digital literacy and adoption rates rise among MSMEs, this progress will significantly expedite the process of closing the substantial $14 trillion SME finance gap. The establishment of this digital infrastructure will enable lenders to expand their reach and increase access to finance for MSMEs nationwide."

Maximising financial inclusion

Abhishek Kothari, CEO and founding member of Pepper Money India, says, "The tier 2, 3 cities and beyond are witnessing an increase in economic growth in India. The booming e-economy has been a key facilitator for this growth supported by a rapid rise in internet penetration and increased digitization. While the scale of disruption has been massive across India’s metros, there does exist a digital inequality in Bharat. The lack of localisation of digital economy businesses, particularly, in financial services is what keeps the digital inequality high as there is a huge section of population that continues to be underserved. The digital disruption has opened tremendous opportunities for everyone, and we are especially bullish on the overall BFSI sector which will play a significant role, more than ever, to bring an increasing number of population under the ambit of financial inclusion."

There however is a flipside to the fast expansion of the internet economy, as Nikhil Jois, Growth Head at Bureau sums up,"India's rapid progress towards a digital economy has transformed how we transact, communicate, and access services. However, this digital revolution has also led to an alarming increase in online fraud, posing a significant threat to the security and trustworthiness of India's digital landscape. This demands high vigilance and preparedness for safety."