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Internet Economy To Reach Rs 10.8 Trillion In 2016

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According to a new report in The Boston Consulting Group's Connected World series - The Indian Internet economy contributed Rs 3.2 trillion to the overall economy in 2010, representing 4.1 per cent of GDP, and is projected to rise to Rs 10.8 trillion by 2016.

It found that by 2016 the total size of the G-20 Internet economy will be $4.2 trillion, equivalent to 5.3 per cent of GDP, up from $2.3 trillion or 4.1 per cent in 2010.

India's Internet economy growth rate of 23.0 per cent places it as the second fastest across the G-20 and ahead of many other developing nations in the G-20, which are growing at an average of 17.8 per cent. Projected growth rates elsewhere are: 24.3 per cent in Argentina, 18.3 per cent in Russia and 15.6 per cent in Mexico. In 2010 developed markets contributed 76 per cent of the G-20's Internet economy; by 2016 that will fall to 66 per cent.

Consumption is the principal driver of Internet GDP in most countries, typically representing more than 50 per cent of the total in 2010. It will remain the largest single driver through 2016. China and India stand out for their enormous Internet related exports - China in goods, India in services – which propel their internet-economy rankings toward the top of the chart," said Arvind Subramanian, a Mumbai-based BCG Partner. He further added, "In emerging countries like India, social media are fast becoming the internet medium and mobile the access medium of choice.

Rajan Anandan, VP, Sales and Operations & MD, Google India, said, "India is seeing one of the fastest rates of internet adoption across the globe. We see emerging opportunities for innovation in areas like mobile, e-commerce and cloud and are committed to growing the market by offering more locally relevant services."

Online Commerce
In 2010, the share of total retail carried out online in India was only 0.9 per cent but is projected to reach 4.5 percent by 2016. What's more, the Internet influences only an additional 0.8 per cent of total retail from connected consumers researching online and purchasing offline ('ROPO'). These numbers compare to 3.1 percent for online sales and 4.0 per cent for ROPO in Brazil, 1.7 per cent and 4.8 per cent in Russia, and 5.0 per cent and 9.6 per cent in the US

Consumer Value
Consumers are the big winners of the Internet economy and BCG's study highlights just how essential it has become to everyday life and the value which consumers attach to it. Asked how much they would have to be paid to live without Internet access, Indian respondents said an average of Rs 21,436 per year, or 2.8 times what they pay for access and services. When asked whether they would forgo showering for a year in order to keep Internet access, 36 per cent of Indian online consumers said they would; 64 per cent said they would forgo chocolate; 63 per cent coffee; and 70 per cent would give up alcohol.