Indian

Opportunity
in the Digital
Vipasha
Sharma
Age
Key priorities for realizing Digital India

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Contents
Digitalization: Why now in India?................................................................................ 1
Understanding Indias demographic distribution in the age of digitization.................8
Digitizations Sectoral Impact................................................................................... 12
Opportunities offered by Digitization........................................................................15
Appendix.................................................................................................................. 16
References................................................................................................................ 19

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Background
Digital India an ambitious vision of the Government of India as an enabler for
digital revolution is playing a transformational role in the socio-economic
development of India. With this vision, the country has embarked on a focused
journey in connecting the dots of various projects, past and present, to bring India
on a global platform. The vision of Digital India will help in moving with the universal
trends of digital innovation and create positive impacts on the lives of people rural
and urban, young and old.
With this, the Digital Transformation is becoming a hot word for companies in India
and the time is right for them to pursue digitalization, whereby digitized resources
are being transformed into new sources of profitable revenues.
The market is there: millions of Indian consumers in the cities and rural areas are
fast going digitalsnapping up smart phones and tablets. E-commerce is expanding
with speed. Indias digital talent pool is growing. And an explosion in volumes of
data traffic promises ever more feedstock for analytical engines to extract useful
business insights from data. Governments at the Centre and in States are also doing
their bit by building digital infrastructure to bridge the last mile network gaps.

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Spotlight on Indias Digital Highway

The draft IoT policy by

DeitY aims to create a
US$15 billion IoT
industry by 2020

Make in India
e-governance

Wireless access
accounts
for 92.6% of Indias
internet
Subscribers

BharatNet
Digital India
Internet

Governance
DeitY has formed a joint
task force with an aim to
produce 500 million
handsets by 2019

Things

Total operator outlay in

March 2015 spectrum
Roadmap
auction: INR1100 billion

Cyber Security
Internet of
Fiber Rollout
Spectrum
Wi-Fi and LTE
Digital

Inclusiveness

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Job creation by Digital India

17 million direct and at least 85
million indirect

150,000 additional towers

required to provide pervasive
mobile connectivity and bridge
availability gaps

USOF contains INR356 billion

in unutilized accumulated
funds

In FY14, India telecoms debt

stood at INR2,500 billion,
higher than industry gross
revenue of INR2,339 billion

Total number of mobile

handsets crosses 1000
million in Q1,2016

Government intends to build

100 smart cities in India, with
investment of INR480 billion
over the next five years

India ranks 125th in the

world in terms of fixed
broadband penetration

18MHz, the average

operator spectrum holding in
India is amongst the lowest
globally

INR1130 billion, the

approximate outlay for
Digital India program

The Twelfth Five Year Plan

projects investments of
around INR94 billion in the
telecom sector

Export of mobile handset

from India expected to fall to
zero in 2015

83% of Indias current demand

for handsets met via imports

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Key Figures
`

650 million users of internet by 2020

Mobile will garner 54% of the total gaming in India

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60% of the total population (over 25 years of age)

would be an earning population by 2020

With 28% penetration India has 2nd largest

internet user base in the world

Impact of Digitization on India

400 million

Digit
additional people with access to quality healthcare

300 million
financially included people

14 24 million
workers could gain more years of experience

$17-25 billion
economic value from intelligent
transportation

$50-95 billion
savings and productivity gain

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400Digitalization: Why now in India?

India is the nation of the young and with more than 65% of the population being
less than 35 years of age, India is well poised to leverage the digital opportunity for
leading an internal transformation into a developed society. With internet
penetration moving closer to 50% in the next few years, more and more young
people are spending time on digital devices.
According to a report Connected Life from TNS Global, average millennial (aged 16
years 30 years) in India is spending about 2.2 hours a day (or about 34 days in a
year) on a mobile device. Compared to millennials in the country, Gen X (31years
45 years) spends 1.8 hours on their mobile phones while baby boomers (46 years to
65 years) spend 1.5 hours on their devices.
The report also added that about 85% of the weekly internet millennial population
now owns a smart phone with 43% of them using social media and watching videos
daily.
India is going through a mobile revolution with smartphones outnumbering PCs and
desktops and is set to reach 314 million mobile internet users by 2017. [1]
Also with increasing literacy rate across India (Mumbai 89.78%, Bangalore
88.69%, Chennai 90.23%, Kolkata 87.54% and Delhi 86.32%) more and more
people are getting tech-savvy and like to remain online.

Understanding Indias demographic distribution in the age

of digitization

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Study assesses the impact of digitization across various groups of users. We classify
the users based on the geographical area of their location i.e. tier rating of the
urban and rural areas and their Annual household income.
As of 2011 census, there are 8 metro and tier 1 cities in India Ahmedabad,
Bangalore, Chennai, Delhi, Kolkata, Hyderabad, Pune and Mumbai. As compared to
these, there are as many as 3133 tier 2 and tier 3 cities and more than 1233 rural
hubs.
Tier
Metro
Tier 1
Tier 2
Tier 3
Tier 4
Rural

Category

Global
Strivers
Seekers
Aspirers
Strugglers

Population
(Millions)
>4
14
0.5 1
0.1 0.5
0.01 0.1
<0.01

Annual Household
Income
(INR lakhs)
>12
6-12
3-6
15.3
<1.5

Digitization has resulted in the connected consumer, resulting in exponential growth

of the e-commerce industry in India. The sector has grown in India by CAGR of 34%
since 2009 to touch $16.4 billion in 2014. The following charts list down the number
of shoppers (by income) and their share of spending in 2020, shoppers gender
segregation vis-a-vis their share of spending.
Tier 1 and metro cities make up for the 34% of the total internet user base in India.
According to data from 2014, Mumbai boasted the highest number of internet users
in the country, followed by New Delhi and Kolkata respectively.
Mumbai has about 16.5 million active internet users, Delhi has active internet user
base of about 12.1 million, Kolkata accounted for 6.27 million active internet users
followed by Bangalore (5.99 million) and Chennai (5.58 million).

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Overall, the top four metros have a 23 per cent penetration of Internet users in
India. The other four metros have 11 per cent penetration.

Breakup of 175 million shoppers and spending of $55-60 billion

100%

25%

3%
11%
18%

80%

21%

60%

21%

40%

18%

20%

15%

Strugglers
23%

Aspirers
Seekers

45%

Strivers
Global

0%
# of shoppers (Mn)

Spending ($ Bn)

Of the 175 million connected consumers in 2020, the top 60 million will contribute
68% of the total spend. Customers from Metro and Tier 1 cities are likely to 56% of
the entire population.
Share of women spending because of digitization will double by 2020.

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100%

20%

90%

42%

80%
70%
60%
50%

Women
Men

80%

40%

58%

30%
20%
10%
0%
2015

2020

Preferred mode of being connected in the digitized world

100%
90%
80%
70%

50%
70%

60%

Mobile

50%

Desktop / PC

40%
30%
20%

50%
30%

10%
0%
2015

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2020

Age group of 15-35 years will prefer mobile and other IoT devices to remain
connected, and older age group of 45+ years will prefer desktop / access from PCs
at office place to remain connected.
While the number of shoppers increases day by day, the spending level is also going
up, with almost 34% spending more than INR 10,000 in 2014.
Above Rs. 10000

34%

Above Rs. 5000

23%
%age of People

Above Rs. 2000

Logarithmic (%age of
People)

21%

Above Rs. 1000

22%

0% 5% 10%15%20%25%30%35%40%

With the growth in spending, Indian customers are now spending more and more
time being connected. As per report from Mckinsey, in 2012, Indian consumers were
spending 25 hours a month being connected.

2
25

20

15

10

Research / Purchase
Online
Read / Browse Online
Social Networking
Entertainment
Email / Chat

5
0
Hours being spent

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Digitizations Sectoral Impact

With more and more customers demanding for services focused on technologies of
the 21st century, organizations are changing their core systems to become digital.
The report looks at some of the major industries being driven through the force of
digitization.
E-Commerce Industry
COD will continue to remain the dominant mode of payment, however its share of
transactions will decrease in 2020 because of digitization.

8%

100%
90%
80%
70%

9%
11%
15%

15%
10%
13%
M-Wallet
17%

60%

Credit Card

50%
40%

Net Banking
Debit Card

57%

30%

45%

COD

20%
10%
0%
2015

2020

Share of m-wallet is likely to double from the current usage of 8% to 15% by 2020.

Healthcare Industry
Insights from the study conducted by IDC in 2014 on Healthcare Provider
organizations indicated that an overwhelming majority of providers are interested
in providing mobility solutions for healthcare consumers and professionals.

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Mobility Adoption in Indian Healthcare 2014

No plans for Adoption
Currently using mobile
devices
28%

Currently using mobile

solutions

28%

Developed Mobility
Solutions

8%

15%
14%

8%

Evaluating use of mobility

Planning to adopt mobility
solutions in next 2 years

There are today more than 50 m-health projects going on India.

The graph below indicates the current use of m-Health in delivering services for
information, enabling and transformative healthcare in India to various income
groups. Information services, generally offer one-way communication or messageboard style question and answer services. Enabling services start to function as
substitutes for traditional care and transformative services enable the collection of
objective healthcare data.
Awareness of m-health services

28%

Transformative

21%
27%

Enabling

18%

0%

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Rs. > 500

18%

Information

8%
5%

10%

15%

20%

Rs. < 500

25%

30%

Use of m-health services

28%

Transformative

21%

21%

Enabling

Information

0%

Rs. < 500

13%

Rs. > 500

5%
3%
5%

10%

15%

20%

25%

30%

Banking Industry
The digital revolution promises an extraordinary gain in the productivity of banking
industry and dramatic improvements in the quality of customer service. By the year
2020, smartphones will become the primary banking channel in Indian parlance.
700
600
500
# SmartPhone Users
(Mn)

400

Active Bank Accounts

(Mn)

300
200
100
0

162
343
2015

625
629
2020

Note Number of smart phones will be equal to number of active bank accounts by
2020, making Phone banking primary banking channel in India.

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Opportunities offered by Digitization

The digital revolution is already transforming many aspects of business and even
whole industries. The combinatorial effects of the technologies like mobile, cloud,
artificial intelligence, sensors and analytics among others are opening up doors for
infinite opportunities in the area of digitalization. The following table lists down
digital initiatives for various industries.
Media
Personalized
Advertising
Personalized
Content
Data Privacy
and
Transparency
Reform
Phygital: Digital
Media becomes
Physical
Advicetising':
Advertising as
Advice
Engage, CoCreate and
Crowdsource
The Digital
Organization
Flexible,
Predictive,
Precise Content

Health
Patient
Engagement at
Scale
Precision
Medicine
Robotics

Logistics
Logistics Control
Towers

Automotive
Infotainment

Electricity
Energy Storage
Integration

Con
Data

Analytics as a
Service
Drones

Usage-based
Insurance
Multimodal
Integration

Digital
Customer Model
Energy Solution
Integration

Data
Tran
Data
Expe

Medical
Printing

Autonomous
Trucks

Connected
Supply Chain

Energy
Management

Phys
Tran

Accessible
Intelligence

3D Printing

Digital
Manufacturing

E-co

Connected
Worker

Shared Transport
Capacity

Disrupted Retail

Asset
Performance
Management
Digital Field
Worker

Intelligent
Devices

Shared
Warehouse
Capacity
Crowdsourcing

Connected
Service and
Maintenance
Transformed
Digital
Aftermarket

Smart Asset
Planning

Sma

Appendix
The following sheet contains the distribution as per Census of 2011:
a. Population for each state of India
b. Sex Ratio for each state of India
c. Population distribution between Rural and Urban

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Real-time
Supply and
Demand
Platform

Sma
Cha

The following sheet contains the distribution as per Census of 2011:

a. Literacy Rate in India
b. Literacy Rate for each state in India

The following sheet contains the distribution as per Census of 2011:

a. Cities having Population of 100,000 and above
b. Literacy Rate for cities having Population of 100,000 and above
c. Sex Ratio for cities having Population of 100,000 and above

The following sheet contains the distribution as per Census of 2011:

a. Details of Sects/Religions Clubbed Under Specific Religious Community (India &
States/UTs)

The following sheet contains the distribution as per Census of 2011:

a.
b.
c.
d.

Married Population
Age of Marriage
Duration of Marriage
Education Level of Married people

The following sheet contains the distribution as per Census of 2011:

a. Educational Level By Age And Sex For Population Age 7 And Above - 2011

The following sheet contains the distribution as per Census of 2011:

a. Population Attending Educational Institutions By Age, Sex And Type Of
Educational Institution

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The following sheet contains the distribution as per Census of 2011:

a. City Population Attending Educational Institution By Completed Education
Level, Age And Sex

The following sheet contains the distribution as per Census of 2011:

a. Households with number of aged persons 60 years and above by sex and
household size

The following sheet contains the distribution as per Census of 2011:

a. Household With Number Of Workers By Household Size

The following sheet contains the distribution as per Census of 2011:

a. Workers By Educational Level, Age And Sex

The following sheet contains the distribution as per Census of 2011:

a. Non Workers By main activity, Educational Level, Age And Sex

The following sheet contains the distribution as per Census of 2011:

a. Adolescent and youth population (India , States & Districts /UTs)

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References
1. Location Analysis: Emerging cities of India. Report by Zinnov LLC
2. India in figures-2015, Report by - Ministry of Statistics and Programme
Implementation, Government of India
3. Perspective 2025 Shaping the Digital Revolution, Report by Nasscom
4. Digital India: Unleashing Prosperity, Report by Deloitte
5. Indias path to digitalization, Report by Accenture
6. DIGITAL
TRANSFORMATION:
A
ROADMAP
FOR
BILLION-DOLLAR
ORGANIZATIONS, Report by Capgemini Consulting
7. Digitization for economic growth and job creation, Report by PwC
8. Online and upcoming: The Internets impact on India, Report by Mckinsey and
Company
9. Emerging Consumer Demand: Rise of the Small Town Indian, Report by
Nielson
10.Digital Retail in 2020: Rewriting the Rules, report by: Google A.T. Kearney
11.DIGITAL TRANSFORMATION IN BANKING THE FUTURE OF BANKING, Report
by Happiest Minds

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