Internet-based businesses such as online advertising and e-commerce are slated to touch $100 billion size by 2015, a report by Economist Intelligence Unit has said.
"Even in India, where only 10 percent of the population is online, 1.6 percent of GDP is attributed to the rise of the Internet. This is expected to double by 2015 to be worth $100 billion the same size as the nation's healthcare industry today," the report said.
It added that one of the key factor that will drive the Internet economy in India is digital and mobile advertising.
The report 'Good to Grow: The Environment of Asias Internet Business' said that at present, advertising revenue in India is at 7 percent but out of the $410 million being spent online, 60 percent goes to Google and Facebook, with only the remaining 40 percent going to other online players.
The World Economic Forum's Network Readiness Index puts Singapore, Japan, Taiwan, South Korea and Hong Kong in the top 20 countries globally for the quality of their digital infrastructure but India, Thailand, Indonesia and the Philippines sit at the opposite end of the spectrum, it said.
"There are also sizeable urban versus rural differences.
For example, only 3.6 percent of the 833 million Indians living in rural areas are active Internet users, and one-third of those have to travel for more than ten miles to visit a cybercafe," it said.
The study, however, sounded optimistic on spread of Internet usage with help of government's effort in pipeline.
But the report raised concern on low level of credit card penetration in India checking growth of e-commerce.
"On both fronts, India stands at an abysmally low penetration of 2 percent compared to South Korea, Taiwan and Singapore," the report said.
It raised issue of Internet laws in India and said "poorly worded or confusingly interpreted pieces of legislation notably those in India and Thailand create uncertainty for business owners, as well as high administrative costs in order to put safeguards in place."
Speaking at the launch of the report, Laurel West of Economist Intelligence Unit said "While the Ministry of Communications and Information Technology is responsible for the frequent issue of laws relating to Internet governance, there is no specific regulatory body for content and platform creators."
He added that there is no central avenue for communication with businesses that will be affected by changes in the law.