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Resource centre on India's rural distress
 
 

India to be ranked 3rd largest Internet market after China and the US by Harsimran Julka

By the end of this year, one in every 10 Indians will be an Internet user, making the country the third-largest Internet market in the world after Chinaand the United States. 

At the end of December, 121 million Indians will be accessing the Internet at least once a week to check emails, chat or log on to a social network, a survey has found. India is adding Internet users at the rate of almost 5-7 million a month, and at the current pace it will surpass the US, which has about 245 million users, in less than two years. 

According to the survey by IMRB and the Internet &Mobile Association of India, the country's Internet population was about 112 million by September. When this year ends, about 9 million more will be added, making India one of the world's top markets for Net-based businesses. 

The profile of users is evolving rapidly, showing that the medium has made deep inroads into smalltown India and among the less affluent. There are more Internet users in towns with a population of less than 5 lakh than in the top eight metros put together. 

Schoolchildren make up more than a fifth of the users and more than one in 10 belong to the lowest socio-economic groupings. The Internet explosion is also rapidly opening up markets for online businesses, consumers and retailers. 

For entrepreneurs such as Deepinder Goyal, founder and CEO of Zomato.com, the Internet is changing the business landscape forever in favour of India. "Now startups look to India when planning to start a business... earlier they would flock to the US," he said. The number of customer visits to his site, which provides listings of restaurants, has doubled in the past six months to 2 million. 

"We are seeing 10% week-on-week growth." About 2 billion people worldwide access the Internet and 25% of them are from China. India contributes about 6% to the world's Net population and the US 12.5%. 

Internet-Based Firms Upbeat 

Internet is growing at an unprecedented pace in India. Businesses are experimenting with new models, creating a snowballing effect. It has got the venture capitalists interested and the kind of valuations in the e-commerce space we are seeing are phenomenal," said Upen Rai, director at Times Internet. 

Already, firms such as Google, eBay, Yahoo and Facebook have a large presence in India and are delighted by the prospects before them. "India crossing the 100 million Internet users mark represents an incredible market opportunity for us. It will particularly foster the growth of e-commerce in India," said Rajan Anandan, MD of Google India. 

Even though the user base is vast, the total number of Internet connections is just 14.7 million, of which 11.87 million are broadband links. This indicates that most people share Internet access in offices or cyber cafes. An average unlimited broadband plan costing about Rs 750 per month is still too expensive in a country where the monthly per capita income is Rs 2,810. 

Of all the broadband connections, only 12% access the Internet at 1 Mbps or higher speeds. About 54% of users access Internet at speeds of 256 Kbps or lower, and for 34% the speeds are between 256 Kbps and 1 Mbps. 

The survey found that more than 75% of Internet usage is among school- and college-going students and those who have recently graduated. However, there is a stark contrast in the usage patterns between urban and rural users. An urban youth accesses the Internet for emails, social networking and research about education, in that order of priority. 

A rural youth uses the Internet to listen to music, watch videos, download photos and email. "India is now of one of the top markets for Yahoo. We are now focused on localising content for rural masses," said Nitin Mathur, the head of marketing at Yahoo! India. 

Mumbai has the highest number of Internet users (6.2 million) followed by Delhi/NCR (5 million), Kolkata (2.4 million) and Chennai (2.2 million). While common access points such as cyber cafes continue to be important, there has been a dramatic fall in access from cyber cafes. 

Access from home, at 37%, has grown at the cost of cyber cafes and access from offices. The survey found that of the active users, 48% used the Internet at least six times a week and 28% used it daily.