Digitised India -ever imagined the state of our lives in India back in 2015? Smartphones were still a luxury, while 4G was expensive and not widely available. On the other hand, Amazon & Flipkart were still struggling to earn the trust of the Indian consumer. Also, there was no Swiggy, but with a few online directories/catalogues of restaurants, we had Zomato. Uber & Ola were still settling in India. . Netflix was part of the US, while Hotstar was an idea in progress. A wallet called Paytm started to come into use, but UPI was non-existent, and so were PhonePe & Google Pay. And WhatsApp was a simple messaging service used by a handful of young Indians.
Though, a lot changed in the last five years. The credit goes to a combination of affordable smartphones & cheap internet data. Apps & services that were non-existent have become ubiquitous and an integral part of the daily lives of millions of Indians. So critical that even during the current lockdown imposed by the Indian Government to contain the spread of Covid-19, many had special permission to continue operations as they’re now vital.
India’s population has been the world’s 2nd largest for decades. The change has only been in the last 5-10 years. Hence the bulk of the Indian crowd has started to benefit from the technological advancements. Internet adoption in India has been slow to evolve compared to most developed nations. However, today it’s different.
With the rising disposable income and increasing awareness of the potential use of smartphones, even internet users are expected to grow. Digitisation has been phenomenal in India over the period. And thanks to the rapid increase in mobile subscriptions.
While broadband Internet has been around the world, however, the revolution was driven by the advent of smartphones. Then closely followed by the cheapness of mobile data.
Drivers of the Digital Revolution
The factor attributed to revolutionary digitised India in the last 5-10 years are the following:
A rise in income:
A steady rise has been observed in income per capita between 2015 to 2019-20. The increase is about 50% in the last five years, increasing disposable income. Thin, in return, has led many to buy smartphones and spend on data services and internet-based apps or services.
As per the Indian population, the youth population is high. This sect of the population is more ambitious, aspirational, and willing to spend than previous generations. We’re a lot more tech-savvy and have fuelled heavy demand for data usage.
The Government has strongly supported digital-friendly procedures such as reducing license fees, relaxed FDI norms, enhancing spectrum limits, etc. The push toward digital a banking system has also been proactively pushed by the Govt. via the implementation of UPI, reduction in online transaction fees, etc. The side benefit of the demonetisation in 2016 led to a massive increase in the usage of electronic transfers and cashless payments.
Today smartphone has become affordable and a necessity for people. Even the smartphone industry moved beyond the premium phones and made cheaper products available. A combination of imported Chinese phones and homegrown brands like Micromax, Karbonn, Lava, etc., added to this revolution.
Cheap data has been the other key in accelerating of the digitised India. It has pushed internet-based apps/services more profoundly in our economy. The commercial launch of 4G was already in the growth stage in 2013-14. However, the entry of Reliance Industries’ Jio in 2015 revolutionised the Internet. They offered high-speed data for free for months, giving consumers a taste of the revolutionary technology. Internet penetration refers to the % of the population that has Internet. And the number has increased almost 3x compared to the 17% back in 2015, though still very low compared to global standards. Other developed nations like the US, Germany, the UK, etc., have more than 90% internet penetration. Moreover, developing economies like Brazil (82%), Thailand (73%), Vietnam (71%), Philippines (67%) have much higher internet penetration than India.
It’s upright to say that India’s digital revolution has just begun. There’s still much scope for internet penetration, specifically in rural India, which remains largely untapped. The rural penetration is relatively low at about 30%. However, with smartphones becoming cheaper each day and insufficient data, prices are expected to increase significantly over the next few years.
Investing in Digital India
Quite true said, the shift towards a more digitised India brings in an investment opportunity that has potential returns. Although VCs have been at the forefront of this, investing heavily in e-commerce companies, food delivery services, and other businesses – such investment opportunities aren’t available to ordinary retail investors.
However, many listed companies will benefit from this push toward digitised India. The underlying infrastructure primarily enables this growth – broadband companies, 4G providers like Jio & Airtel, telecom tower owners like Bharti Infratel, etc.
Numerous online-focused businesses will benefit from this trend. IRCTC is an excellent example since it’s fresh in the mind of investors due to its recent blockbuster IPO in 2019. Its catering services aside, IRCTC is the flagship online ticketing platform for the Indian Railways. Its growth depends on the usage & convenience. Online portals like naukri.com or bharatmatrimony.com and even services like JustDial are likely to see an increased business with high use of smartphones & easy Internet access.