Internet Economy to grow to US$1 trillion by 2030 : Redseer

The report attributes the potential growth to an increase in digital entertainment, E-commerce and developments in logistics

February 11, 2022

Three distinct cohorts have been identified on the basis of income level and expectations from internet service providers.

The third demographic (income less than US$ 5,000) faces challenges in Internet access, demanding vertical problem-solving.

Regional language apps, omnichannel approaches and vertical super-apps are proposed solutions to expand access.

The quick commerce, e-health, online mobility and e-tailing sectors are expected to usher in the consumer-led economy.

India’s Internet economy is expected to expand to US$ 1 trillion by 2030, and has exhibited over 50% year-on-year growth in 2021 according to a Redseer report. The growth is fueled by multiple key factors including an increase in Internet and E-commerce penetration, digitization of the business-to-business (B2B) space and the scaling up of the logistics sector. The rise of digital media in entertainment, regional-language applications and the omnichannel approach are currently furthering internet adoption among three diverse consumer cohorts. The report identifies the three cohorts as follows: (i) the demographic with an annual income level of US$ 12,000, (ii) the demographic with an annual income level between US$ 5000 to US$ 12,000, (iii) the demographic with an annual income level of less than US$ 5,000. 

The first cohort has been successfully catered to by global service players looking to provide premium offerings. The second cohort comprises 100-200 million individuals and balances its aspirational values with budget consciousness. The third cohort is scattered across Tier-II and rural regions with a population count of 400-500 million. Vertical problem-solving techniques including regional-language apps,super-apps and omnichannel communication are expected to further internet penetration among this diverse cohort. 

Investors are recognizing the potential for growth and have invested more than US$ 40 billion in the internet startup ecosystem, and nurtured 42 unicorns in 2021 alone. The report forecasts the launch of 75 technology Initial Public Offerings (IPOs) by 2025, bolstered by conducive policymaking, economic recovery and the expansion of the consumer base. The Software-as-a-Service (SaaS) industry is also expected to grow to US$ 8 billion by FY26. The consumer-led economy will be shaped by expansions in the online mobility, quick commerce, E-health, online mobility, E-tailing and foodtech sub-sectors of the internet.