India is embarking on its 'Digital Decade' propelled by a persistent transformation in consumer and merchant behaviour, bolstered by robust investor trust. This trajectory has paved the way for the country to achieve a substantial $1-trillion consumer internet economy by 2030, found a study.

According to the 'India e-Conomy Report' — jointly published by Google, Bain & Company, and Temasek — with over 700 million internet users in India, digital services have become an indispensable part of their lives. Among them are 350 million individuals who utilise digital payment platforms and 220 million who engage in online shopping.

As India experiences an extraordinary surge, resulting in a doubling of household consumption by 2030, digital commerce will inevitably become even more deeply ingrained in the everyday lives of Indians, the report stated.

The study leverages insights from Google, Temasek, Bain, as well as interviews of experts and industry insiders, and primary research.

As per the report, India is undergoing a "fundamental shift in income and consumption", directly leading to growth spanning business-to-business (B2B) e-commerce, business-to-consumer (B2C) e-commerce, software-as-a-service (SaaS), online travel bookings, online media consumption, online food delivery, edtech, healthtech, and insurtech, among others.

As per the report, India is leading the world in online video streaming, digital payments, and time spent on social media, while just about trailing the United States in overall time spent online per user per day.

Further, the report notes that over the past few years, Indian consumer habits have undergone significant changes — characterised by a widespread preference for digital interactions, indicating a shift away from traditional methods; convenience and value becoming crucial drivers for consumer choices; and sustainability. The report adds that digital adoption has reached the tipping point in most sectors in India's internet economy, with 220 million people engaging in digital activities at least twice in the past 12 months.

According to the report, this wave of change is not limited to large cities alone. India's tier 2+ (T2+) cities — with their substantial population size, a growing cohort of internet users, and their readiness to adopt digital-first habits — are playing a significant role in driving this transformation. However, while the opportunities in T2+ cities are immense, they also present substantial challenges that require a collaborative effort from both the government and the private sector.

As of 2022, India's internet economy was valued at between $155-175 billion, the report states. This is roughly 48 percent of India's technology sector and 4-5 percent of the country's GDP. By 2030, the report projects that this value will increase to between $900 billion and $1 trillion, accounting for 62 percent of the technology sector and 12-13 percent of India's GDP.

Further, the report adds, the India Stack has played a pivotal role in enabling the accessibility of public goods and services to both citizens and businesses through digital platforms — key services like Aadhaar, United Payments Interface (UPI), and Digilocker have been instrumental in facilitating the growth of India's internet economy.

These advancements, the report adds, have paved the way for disruptive open networks such as the Open Network for Digital Commerce (ONDC), Open Credit Enablement Network (OCEN), and Unified Health Interface (UHI). These networks have unlocked fresh opportunities for both established and emerging sectors, positioning them for potential breakthroughs in the future.

The report goes on to add that increasing adoption of digital tools and solutions by consumers and merchants have unlocked digital financial services to those who may not have been able to access credit using more traditional means. The report predicts that sub-sectors such as payments, lending, investments, and insurance can anticipate a compound annual growth rate (CAGR) of 8-14 percent between 2022 and 2030. The report notes that there have been more than five billion consumer-to-business UPI transactions as of the end of 2022, with more than 50 million payment QR codes deployed at merchant outlets across the country.

During the same time period, the report notes that five million online customers used buy-now-pay-later platforms, with a 45 percent year-on-year (YoY) growth in the number of total digital loans disbursed.

All these factors, the report notes, will contribute to India becoming a $1-trillion internet economy by 2030. However, the report ends on a cautious note, stating that there are certain challenges that must be solved before this can be achieved:

Drawing the line between personalisation and data privacy.

Businesses balancing the drive for profitability and growth with innovation.

Harnessing the power of artificial intelligence in a responsible manner.

Ensuring that India's growing entrepreneurial ambitions remain undeterred.

Upskilling and reskilling India's talent pool to maintain relevance.

In conclusion

As per the report, the thriving internet economy in India offers businesses a lucrative chance to capitalise on its potential. To fully exploit this opportunity, enterprises must acquire a profound understanding of evolving consumer demands and prioritise the establishment of stronger customer relationships, the report states, adding that additionally, leveraging digital technologies has become imperative for optimising operational efficiency and fostering business growth.

As the digital transformation unfolds, it will bring forth distinctive challenges related to trust, security, and responsibility. Addressing these challenges will necessitate collaboration between India's policymakers and the private sector.

First Published:Jun 6, 2023 12:29 PM IST