October 12, 2006

As a whole, most of India's modern citizens would like it if today their country would be seen and recognized as a high-tech innovation hub.

If India could be seen as a powerful country of educated workers available for outsourcing scores of IT projects, complete with knowledgeable engineers capable of designing and integrating the high-tech products of the future, this would certainly make many Indians happy.

The new eMarketer India Online report depicts India as one of the most important development centers for software, IT outsourcing, R&D, biotech, customer contact, system design and other knowledge-based products and services.

With overall Gross Domestic Product growth at almost 7 percent, India has one of the fastest-growing economies in the world.

The only element that doesn't seem to integrate with India's image of itself as a high-tech hub is the Internet. Today, India's online population numbers make it look like a severely lagging country in terms of high-tech.

However, in some areas, things could be starting to change.

eMarketer estimates there were 27.7 million Internet users in India ages 3 and older last year, and projects that in four years from now the total will be 67 million, an increase of about 142 percent over the four-year period.

But the overall population of India dwarfs that of the online community within the country, resulting in only a 2.6 percent Internet penetration rate for last year.

Underlying the reduced costs of broadband connections, a rising demand for eCommerce sites and growing .in (country) domain registrations, the Internet and Mobile Association of India (IAMAI) says Web adoption is rapidly growing in India, and at a record pace.

According to the IAMAI, the number of Internet users in India reached 38.5 million at the end of last year. That is up 54 percent from 2005. The trade organization expects 100 million Internet users in India in less than fourteen months from now.

However, when it comes to high-speed Internet, India has a lot of catching up to do.

According to Point Topic, India has managed fewer broadband connections than Hong Kong, a region it out-populates by nearly a billion! Analysts have estimated broadband penetration to be no more than 3 percent in India.

On the other hand, retail eCommerce is growing fairly rapidly. The Internet and Online Association of India (IOAI) expects retail eCommerce to experience an overall 95 percent increase in FY 2006/2007, reaching sales of INR 23 billion, or about $494 million.

Is the cup of tea half-full or half-empty? Only time will tell. However, after a slow ramp-up online, do not bet against India catching up.

Source: eMarketer