Internet to Contribute Nearly 16 Percent to India's GDP by 2020: Study

The year 2015-16 saw a 17 percent increase in the total Internet traffic in India that led to an increase of Rs. 7 lakh crores in Gross Domestic Product (GDP), of which at least Rs. 1.4 lakh crores came from Internet-based app services, a new first-of-its-kind study revealed on Friday.

This puts the Internet's contribution to the country's GDP at about 5.6 percent in 2015-16 and is estimated to grow to nearly 16 percent (Rs. 36 lakh crores) by 2020, of which internet-based apps will contribute about half (about Rs. 18 lakh crores), said the study, titled "Estimating the Value of New Generation Internet based Application Services".

Conducted by the leading think tank ICRIER along with Broadband India Forum, the study was released by Communications Minister Manoj Sinha in the presence of senior officials from the Ministry of Electronics and Information Technology (MeitY), the Telecom Regulatory Authority of India (TRAI) and Niti Aayog at an event in the capital.

"Internet apps and services are disrupting traditional industries. Regulation, globally, is evolving to strike the right balance between protecting consumer/business interests and encouraging the ecosystem to innovate further," said T.V. Ramachandran, President, Broadband India Forum.

"India needs to chart its own course from a policy/regulation perspective considering the significant higher impact on its economy. It needs to resist the temptation to follow global precedence or come up with defining laws without active stakeholder discussion," Ramachandran added.

The study looked into case studies of 16 service/app companies, including MakeMyTrip, Practo, Paytm, Urbanclap, Netflix, Wynk, BYJU's, TrueCaller, farMart and MP Mobile.

"With Internet penetration and the start-up ecosystem achieving critical mass, we felt the time was right to study the micro-level impact of the Internet services and apps on the country and define interventions needed for long-term growth," said Dr Rajat Kathuria, Director and Chief Executive, ICRIER.

"Interestingly, we found that the ecosystem's contribution went beyond just economic into social areas such as mainstreaming the differently abled and enabling women safety, among others," Dr Kathuria added.

According to the study, a 10 percent increase in total Internet traffic and mobile Internet traffic increases India's GDP by 3.3 percent and 1.3 percent, respectively, as against the global average of 1.3 percent and 0.7 percent.

The study also made some recommendations on the demand and supply side to ensure long-term growth of the Internet services and apps economy and its sustained contribution to the country's GDP.

The key recommendations include a pragmatic approach to regulation, increased connectivity and network infrastructure, focus on developing vernacular content and cyber-security infrastructure, among others.

Disclosure: Paytm's parent company One97 is an investor in Gadgets 360.