You could think of India’s internet growth as a primed-up athlete finally hitting his full stride.First, there was a gentle warmup. It took 10 years for India to get her first 10 million users and another decade to hit the first 100 million.Then, the pace quickened. The next 100 million users came in three years between 2010 and 2013, and the third 100 million took only 18 months. Internet users crossed 300 million in December 2013. The athlete has hit his full stride now. “We are adding five million new users a month and that should take the user base to 500 million by 2018-19,” says Rajan Anandan, managing director, Google India.A digital population of 500 million could transform India’s economy, business landscape, governance and society beyond recognition.First, internet growth could spawn an economy worth $200 billion from internetrelated activities, according to Boston Consulting Group (BCG). This is a four-fold increase from where we are today and the growth will come in just three years. Says Alpesh Shah, partner BCG: “Every second Indian will be an internet user by 2018. The biggest growth will come in e-commerce, which will expand almost fi ve-fold, while education and healthcare via mobile internet will expand internet use.”Second, it could catalyse entrepreneurship and wealth creation. Global investors are already chasing Indian startups. Former Skype chief operating offi cer, Michael Jackson, is looking to invest in internet startups in India through his $300 million venture fund Mangrove. “I’m bullish on India’s internet economy. With 500 million users it will be the size of Europe. There are challenges like low bandwidth, but that won’t prevent the upcoming internet tsunami,” says Jackson, partner, Mangrove Capital Partners. Ace angel investor Anandan is willing to bet that each of the next fi ve years will see at least one new startup scale up to be a $1 billion company.Third, internet growth will also lead to massive job creation. About 4 lakh people now fi nd direct employment because of the internet. This will expand to 20 lakh by 2020, BCG estimates. India’s internet economy could eventually create 65 million jobs and increase per capita income by 29% as more people come online, according to a Deloitte Consulting report titled ‘Value of Connectivity.’Connectivity will impact businesses and improve socioeconomic indicators. Deloitte cites a study done in two villages — one with connectivity and another without. Child mortality decreased by 14% in the village with connectivity. Fourth, governance will improve, with or without politicians. E-governance transactions increased from 0.5 billion to 1.7 billion between 2013 and 2014, according to etaal.gov.in, which tracks internet transactions.Exact estimates vary. But most expect India will have 500 million people online by 2018. Industry experts expect as many internet users by 2018. BCG is more bullish, with a target of 583 million users by 2018, almost all of them mobile internet users.While studies make for a rosy outlook with promises of eliminating poverty as the internet economy expands, there is a lot to consider. At 300 million users, most of the English-speaking population is already covered. The next wave of growth will have to come from vernacular users. Internet access is expensive, and out of reach for most such users.Quality of connectivity could pose a challenge to access bandwidth-heavy apps in healthcare and education or even watching movies and shopping. “We will also be the world’s largest narrow band country as most people can’t afford broadband data plans. With 300 million users we have covered India, but Bharat is yet to get connected,” says Subho Ray, president, Internet and Mobile Association of India (IAMAI). “Growth could plateau unless public, free WiFi happens in sync,” he adds.Not getting them online, leading internet thinkers believe, will be as much a loss to those that are online. “To continue connecting the world, we have to connect India. More than a billion people in India don’t have access to the internet. That means they can’t enjoy the opportunities many of us take for granted, and the entire world is robbed of their ideas and creativity,” said Mark Zuckerberg, CEO & founder, Facebook, in a statement at the launch of internet.org app for India on February 10.Most of the internet connectivity in India is 2G. For example, only 11 million out of the largest telecom company Airtel’s subscriber base of 210 million has 3G mobile internet (as on September 2014). Moreover, 90% of the market is pre-paid with the average monthly spend per user as low as Rs 150 and monthly re-charge of Rs 50 to Rs 70. There’s no way they will access 3G where a 1 GB data plan costs Rs 250 a month.More people are going online — via free WiFi or paid access. About 45 million access internet in public areas and time spent online has gone up from 10 minutes per day one year ago to 45 minutes now, according to Ozone, which has set up 6,500 hotspots at places including Mumbai airport, KFC and McDonalds. But these are clustered mostly in the big cities.Idea Cellular, the country’s third largest telco by user base, in its recent quarterly earnings, reported a 16.9% quarterly expansion in data usage. Airtel reported a 23% jump in new data connections.Despite the connectivity challenges, more people are coming online. “This is an encouraging sign. If building the network is the highway we are at the parking lot,” says Rajesh Janey country head, EMC, a storage services provider. “More people are using mobile banking and shopping from their smartphones, and digital ads are growing.”Janey says data storage will expand from 326 exebyte in 2013 to 2.8 zettabyte by 2020. Five exabyte is about all words ever spoken by human beings. And one zettabyte is the size of about every person on earth receiving 87 newspapers per day.Airtel believes the future will be led by the internet economy and more people will experience improved productivity and ease of doing transactions by going online. Says Srinivasan Gopalan, director, consumer business Bharti Airtel: “Out of the 300 million, 100 million users have integrated internet into their daily lives. I am not as much concerned about the 500 m users-mark as about people who actually use the internet.”Data consumption per user, Gopalan says, averages 563 MB a month, close to US rates and higher than in the UK. Data costs are also comparable with similar economies. “It’s less about costs and more about educating new users on what they can do with an internet connection. And the good part is that’s changing. In fact, in two years, demand won’t be a constraint, it will be supply,” adds Gopalan.In China telcos have 80 Mhz spectrum, compared to 5 Mhz in India. Hence quality of services is not as great as it is in China, which boasts of 300 million online shoppers and 600 million internet users.So far internet penetration in India has been in English, while new users will demand local languages interfaces to shop, pay bills, to reach out to doctors online and more. “About 75% of new users will come from non-English speaking backgrounds. They won’t fi nd it easy to navigate unless they can shop or study in their own language,” says Shah of BCG.Facebook is now available in 12 languages. Says Kevni D’Souza, head of growth & mobile partnerships, Facebook India: “These 12 languages cover a large part of India’s population. Hindi alone covers 400 million people. We are also making it easier to use Facebook with Re 1 per day access to address low ARPU problem.” Facebook, which has 110 million users in India, is seeing non-English language user base double every six months.HDFC Bank, which has an English app that enables 75 transactions from booking fi xed deposits to ordering cheque books, is now focussing on expanding its Hindi app as well. The Hindi HDFC Bank app enables 26 transactions and the bank plans to add more transactions this year. “60% of our customers use mobile banking and this will expand to 80% in two years. We will scale up Hindi to make the bank accessible to more users online,” says Nitin Chugh, head digital banking, HDFC Bank.Mobile payment services provider Paytm, which claims 27 million users, is developing vernacular versions and expanding beyond payments to become a marketplace. Another startup, ikaaz, founded by former Nokia managers is working on making payments easy using smart phones — in English at present with plans for vernacular languages soon. It has tied up with Development Credit Bank and claims 9,000 merchants on its platform which enables B2B payments.At e-commerce major snapdeal.com, the mobile app is in English while the website offers a Hindi and Tamil interface as well. Says Ankit Khanna, senior vice president, product management, snapdeal.com: “Language access is seeing single-digit growth.We will introduce four more languages in the next three months.” About 70% of snapdeal’s 5.5 million daily shoppers land on its mobile app. “We need to focus more on languages and the mobile. With 500 million internet users there will be at least 100 million online shoppers and 1 million sellers. The challenge is to create relevance for the expanding user base and enable quick decisions,” adds Khanna.Adds Srikanth Pinninti, vice president, marketing, Myntra, a fashion e-tailer that is now a part of Flipkart: “At present, we are English-only with a roadmap for languages. But we believe internet penetration is not impeded by languages. It’s far more visual and textual.”While more shoppers are coming on smartphones, about 60% of them are on 2G networks from towns like Nagpur and Bhubaneswar. Says Khanna: “There is lot of buffering on 2G. The focus of our technology team is to improve experience on low-bandwidth devices and display content in a manner that’s easy to navigate.”

While ease of transactions and shopping will push more users to get online and eventually grow the internet economy, “infrastructure (speed of access, data costs, languages) needs to catch up with speed of internet rollout,” says Sandeep Ladda, technology lead, PricewaterhouseCoopers. Otherwise, the promise and potential of a digital nation will remain unfulfi lled.

10% rise in internet penetration increases GDP by 1.08%.If internet were a sector its weight in GDP would be greater than that of agriculture or utilities.Increase in net maturity in the West led to rise in GDP per capita of $500 on average in the past 15 years. It took 50 years of industrial revolution to achieve the same.Aadhaar-linked mobile banking and payments will accelerate spread of banking pan-India. The have-nots will leapfrog into banking. Without the internet, increase in banking penetration could take 30 years.The internet will enhance market reach of products and services.For every one job lost, 2.6 new jobs are created in an internet economy. In France, in 15 years, 5 lakh jobs were lost and 1.2.million jobs were created due to the internet Job creation will be both direct — in tech-based enterprises and indirect — to support the internet economy like digital ads, services support for devices.15-20 lakh new direct jobs will be created by 2018 in internet sector.Internet economy will enable a shift to highskilled labour and increased autonomy to labour In e-commerce alone new jobs are increasing by 30% a year.Bandwidth per person per month is around 500 MB. This will grow by 10x in a few years.Internet economy to balloon from $60 billion to $200 billion in the short term. This includes e-commerce to sales of internet devices like smartphones.Music & book stores have already shut down. Any product that can be bought via a code (like smartphones, TVs etc) will be bought online A network of sensors exchanging information through the internet will cut wastages and help respond to crisis rapidly.It will be an app-driven economy. Apps will connect buyers to services, as in the taxi business.There will be more internet-driven startups.Cost of starting a company averaged $5 million in pre-internet era and now it’s under $50,000, attracting more people to start companies.The gestation period to test whether an idea works or not is less than 18 months now. This along with low cost to start ventures is increasing risk appetite.Govt’s Rs 10,000 crore fund for startups, Nasscom’s 10,000 startups initiative, etc, augur well to make access to capital easy, a big boost for entrepreneurship.There will be at least one startup that scales to $1 billion valuation in each of the next five years.Transparency in transactionsEfficiency: Quick turnaround time, like with Passport Seva to issue passports has come down from 12 weeks to four weeks.Will reduce further as enforcement agencies, police use analytics to verify claims.Productivity gains: Cut the queues and save time — pay bills, taxes on smartphones App-driven economy: Learn, play, entertain, work with apps.End of the middleman: People who thrive on inefficiencies of the system will be eliminated