With 254 million users by 2014, India to beat US in internet reach: Study

BANGALORE: As over 200 million Indians log onto the internet, the country will surpass the United States as the second largest web market in the world after China, by the end of next year according to a new report.

The Internet and Mobile Association of India said India will have over 213 million users by the end of December.

"This phenomenal growth will spark off new web-based startups in the consumer internet space. Travel and e-commerce are areas to watch-out for," said Subho Ray, president of IAMAI.




While it took a decade to move from 10 million to 100 million, the next hundred million users have been added in just three years.

IAMAI which co-authored the report with research agency IMRB estimates that decline in smartphone prices and internet data plans will catalyse greater adoption and catapult the user base to 254 million by end 2014.

"India is all set to see a wave of new web businesses, which will entirely leap frog to the mobile and not even touch the PC," said Phanindra Sama, cofounder of online ticketing venture RedBus, which was sold to Ibibo Group for about $100 million ( Rs 600 crore), this year. "The future crop of most successful entrepreneurs will own web based businesses," he said.

India has also seen a demographic shift in past 12 months. College goers under the age of 21 years have become the largest category of internet users accounting for about 60 million internet users in the country. Rural India with about 72 million Internet users is also a hot target for internet startups.

The dramatic growth of internet in India is also attracting overseas Indians to the country's thriving startup ecosystem, similar to what happened in China a decade ago. "There is much more opportunity in India," said Rohit Chaddha, who returned from the UK to establish online food delivery platform FoodPanda last year and has raised funding from German investment firm Rocket Internet and iMena Holdings from West Asia.

"VC money flows to markets which have large problems to be solved with startups solving them, India is one such market," said Deepinder Goyal, 30, cofounder and CEO of Zomato, an online food guide, which raised $37 million this week from Sequoia Capital and InfoEdge, valuing the company at over $150 million.

For global internet corporations too, India is now the preferred choice for new investments. Google has over 100 million users in India, while Facebook has about 82 million.