India - Information and Communication TechnologyIndia -Info Comm
The Information and Communication Technology (ICT) sector contributes over 13 percent to the country’s Gross Domestic Product (GDP) and India’s digital economy generates about $200 billion of economic value annually from business process management (IT-BPM), e-commerce, domestic electronics manufacturing, digital payments, digital communication services (including telecom), etc. By 2025, India is expected to have an overall digital economy of about $800 billion. According to KPMG, the market size of the India’s ICT industry is currently estimated at $180 billion and projected to grow to $350 billion by 2025. The market breakdown by category is: IT services (52 percent), ITeS BPM (19 percent), Engineering and R&D Software (20 percent) and Hardware (9 percent).
Major ICT centers in India include: Bengaluru (formerly Bangalore) also known as the Silicon Valley of India, Hyderabad, and Chennai in South India; New Delhi and Gurugram (formerly Gurgaon) located outside of New Delhi in North India; and Mumbai and Pune in West India.
- India is a top global market offering many opportunities with 1.3 billion citizens, a rising middle class, and an economic growth rate of over 7 percent.
- India imported over $2.2 billion in computer and electronic equipment from the U.S. in 2017 (NAICS code 334).
- India is the fastest growing telecom market in the world with over 550 million internet connections and over 500 million smart phone users.
- The ICT market in India is estimated at $180 billion and is projected to grow to $350 billion by 2025.
- The ICT hardware market is estimated at $20 billion.
- The ICT sector growth rate is over 9 percent per year and it contributes about 9 percent of India’s GDP.
- The Digital India initiative aims to improve digital infrastructure and internet connectivity, and this and other major government initiatives will drive growth in the ICT sector and open opportunities for U.S. companies.
India has a well-organized distribution system with all major global distributors present. Companies can sell directly, but it is advisable to create a local presence in India through an agent, representative, or distributor. Direct sales, as well as using partner system integrators, and value-added resellers (VARs) is common. Subscription-based sales on cloud platforms are also common.
In recent years, data protection and privacy has been a major concern in India. The Government has come up with various bills and guidelines for data privacy, protection and localization. The Government has introduced Information Technology Intermediary Guidelines Rules-2018, a draft Personal Data Protection Bill, draft E-Commerce Policy, National Digital Communication Policy, national policy on electronics and national policy on software products as it aims to develop the digital economy.
India is adopting digital technology rapidly with more than 207 million Indians coming online in the last five years. Smartphone penetration has increased manifold from 5.5 per 100 people in 2013 to 26.2 in December 2018. Monthly mobile data consumption per user has increased by more than 54 times since mid-2016. Monthly fixed-line data consumption per user has reached to 18.3 GB in 2018 from 7.1 GB during 2014 (MeitY, 2019).
India has the second largest consumer base with 1.2 billion mobile subscriptions and second largest internet subscriber base with 560 million internet subscription as of September 2018. The Indian government has issued more than 1.2 billion Aadhaar unique digitally verifiable identities to Indians which is the largest national rollout globally. Indian internet users recorded 12.3 billion app downloads in 2018. India now has more than 294 million active social media users and 200 million users active on instant-messaging services like WhatsApp (MeitY, 2019).
India currently has approximately 1.5 million kilometers of optical fiber cable and less than a quarter of the towers are fiber-connected. India is working on one of the world’s largest rural optic fiber roll-outs in the world with an aim to connect 600,000 of its villages to broadband via its flagship program ‘BharatNet’ (MeitY, 2019).
Despite infrastructure challenges, the cloud services market in India is growing rapidly. Cloud spending in India is currently estimated at over $2.12 billion with a strong government push towards improved infrastructure and adoption of cloud services, expanding internet access through smartphones, and more domestic enterprises and end users moving towards new technologies like artificial intelligence (AI), IoT and blockchain.
As India reviews various tax ramifications and possible complications of providing items via cloud, it is advisable for U.S. suppliers or service providers to consider consulting experts about tax issues, data localization, and compliance requirements in India.
Best Prospects Sub-Sectors
Cybersecurity critical infrastructure protection across major industry verticals is urgently needed.
India’s cybersecurity market is estimated at $2.1 billion and growing at 10 percent per year.
Solutions for e-Commerce and digital payments.
Solutions for ITES-BPO (Information Technology Enabled Services – Business Process Outsourcing).
Healthcare IT, especially cloud-based solutions and remote diagnostics and telemedicine solutions.
Emerging technologies like AI, Blockchain.
Industrial automation including IoT and Industry 4.0.
The IoT market is expected to reach $11.1 billion with 2 billion connected devices by 2022 (KPMG, 2019). Focus areas include agriculture, health, water quality, natural disasters, transportation, security, automobile, supply chain management, smart cities, automated metering and monitoring of utilities, waste management, and oil and gas.
With business of all sizes and the government increasing their spending on ICT security, cyber security services (consulting, implementation, support and managed security services) is the fastest growing segment and expected to be a major opportunity in India.
Artificial Intelligence (AI)
Spending on AI by Indian companies is expected to increase due to the rising influence of AI-based solutions across the verticals per industry sources. AI is expected to add $1 trillion to India’s economy by 2035 (KPMG, 2019). India ranks third in the research on AI, after China and US.
Robotics in industries is increasing rapidly in India. Use of robotic technologies is growing across many sectors such as manufacturing industries, pharmaceutical, packaging, atomic energy, space, metals, textiles, and the automotive sectors in India. The Indian healthcare services sector is another area where robotic technology has been increasingly adopted for critical surgeries and for rehabilitation.
The blockchain market is expected to grow at a CAGR of 58 per cent in the year 2018-24 (KPMG, 2019). The banking and finance sectors have seen the highest adoption. Other industries, such as healthcare, retail and logistics, are also rapidly accelerating adoption. Blockchain usage has also been tested in the areas of trade finance, cross-border payments, bill discounting, supply chain financing, and digital identity.
This sector in India is expected to see increased adoption of cloud-based solutions and remote diagnostics and telemedicine solutions.
The Indian e-commerce market is expected to reach $150 billion by 2022, according to KPMG. The e-tailing industry is expected to grow due to the rapid growth of online shoppers. Large appliances are one of the fastest growing categories in Indian e-tailing, with its gross merchandise value growing 100 percent in 2018. India’s $1 billion online grocery market is growing at approximately 71 percent CAGR to reach $5 billion from 2017-2020. Tier-2 online shopper population is the growth driver for e-tailing – growing 3 times faster than metro cities. Online mobility is expected to encompass larger than current 1-2 percent share of all public transport rides by 2020.
Digital payments in India is expected to reach $1 trillion by 2023, according to KPMG. Digital payments have increased significantly after demonetization came into effect two years ago. National Electronic Funds Transfer (NEFT) transactions increased from $141 billion in 2016 to $2.57 Trillion in 2018. Innovation has been one of the biggest drivers for the growth of India’s digital payments economy. India's real-time money transfer platform Immediate Payment Service (IMPS) has been rated the best global payments innovation by US-based research firm Fidelity National Information Services (FIS). With WhatsApp (with almost 200 million users) rolling out its payments feature which is currently available only in the India, a peer-to-peer system based on UPI will trigger the digital payments revolution in India.
India digital health market is expected to grow at 35 percent CAGR during 2019-25, according to KPMG. India’s telemedicine market, which has been growing at a CAGR of over 20 percent, is expected to cross the $32 million mark by 2020. The convergence of technological solutions with data analytics, cloud computing, telecommunications, and wireless technologies will improve accessibility. The cost of providing medical services has been rising steadily and with technological innovation it will enable scale and lower costs, driving up adoption. Digital health start-ups have gained traction with customers and investors.
The cyber security market in India is expected to reach $35 billion by 2023, according to KPMG. India put forward a draft Personal Data Protection Bill in 2018. The public cloud market in India is expected to reach a value of nearly $2 billion in the near future, which represents a growing pool of vulnerable information that can be misused. Industry 4.0 tools will become an increasing part of cyber security mechanisms, given their utility for detecting areas of vulnerability and possible breaches. Areas of focus for cyber security measures also includes possible internal threats, enhanced security testing and the implementation of blockchain.
The data center market in India is expected to reach $7 billion by 2020 from $4.5 billion in 2018 due to the growth of digitalization, according to KPMG. Around 10 data center projects are currently under planning phase in India.
India imports the hardware and electronics to support the growth of IT sector; 50-60 percent of electronic products and 70-80 percent of the components are imported. India’s “Make in India” policy and other new policy initiatives aim to develop India’s IT and electronics manufacturing industries.
India is the second-largest mobile manufacturer globally with a market size of $22 billion and 268 manufacturing plants in the year 2018 and expected to grow 10 times of the market size by 2025. The top leading handset and wireless manufacturers in India are Samsung, Foxconn, Oppo, Vivo and Micromax.
Mobile applications are one of the fastest growing markets, led by the growing popularity of over-the-top (OTT) application due to availability of low-range smartphones and increasing mobile connections. The market size is expected to grow with 20 percent CAGR to 37 billion app downloads per year by 2022 (KPMG, 2019).
Augmented reality and virtual reality (AR/VR) technology is increasing the pace of adoption in India. The Indian AR/VR market is expected to register a CAGR of 76 per cent from 2018 to 2023, according to KPMG. Applications of AR/VR for headgear and mounted displays are on the rise. Retail, auto, healthcare, gaming and entertainment, defense and training sectors are at the forefront of AR/VR adoption in India.
For the telecom sector, 4G is expected to peak by FY21 and 5G rollout is expected in the next two years. Due to availability of inexpensive handsets, the launch of voice services over long-term evolution (VoLTE) technology and expected use of 4G SIMs by next year is expected to peak the usage of 4G by FY21. 5G rollout is making a progress and the government plans to auction 5G spectrum by end of the year. After the 5G rollout, the subscriber base for 5G is expected to reach approximately 38 percent of total subscribers by FY24. The telecommunications tower industry is expected to grow rapidly due to the expansion of 4G, 5G, Artificial Intelligence, Virtual Reality, Internet of things and M2M.
Trade Promotion Opportunities
The India Mobile Congress is the leading digital and telecommunications trade event in India and the region. The U.S. Commercial Service is collaborating with the IMC organizers to leverage this as a platform to assist U.S. companies.
For more information about opportunities in this sector contact U.S. Commercial Service Industry Specialist: Sudhir Kesharwani at: Sudhir.Kesharwani@Trade.gov
Ministry of Electronics and Information Technology, Government of India https://meity.gov.in/
Telecom Regulatory Authority of India https://www.trai.gov.in/
Mandatory Testing and Certification of Telecom Equipments (MTCTE) https://www.mtcte.tec.gov.in/
The National Association of Software and Services Companies (NASSCOM) https://www.nasscom.in/
Internet and Mobile Association of India http://www.iamai.in/
Indian Software Product Industry Round Table http://www.ispirt.in/
Manufacturers’ Association for Information Technology https://www.mait.com/
India Electronics and Semiconductor Association http://www.iesaonline.org/
Other Sources: Ministry of electronics and information technology (MeitY) and KPMG reports.
Upcoming trade events
Infocomm India, September 18 – 20, 2019 http://www.infocomm-india.com/
India Mobile Congress, October 14 – 16, 2019 https://www.indiamobilecongress.com/
CyFy, October TBC, 2019 https://www.orfonline.org/cyfy/
Convergence India 2019, February 19 - 21, 2020 http://www.convergenceindia.org/