India’s Internet Economy that stands at 1.6% of GDP is slated to US$ 100 billion by 2015, according to a report “Good to Grow: The Environment of Asia’s Internet Business” by Economist Intelligence Unit & sponsored by Asian Internet Coalition.
The report found that one of the key factors that will drive the internet economy in India is digital & mobile advertising. At present, advertising revenue in India is at 7%. But, of the US$ 410m being spent online, 60% goes to Google and Facebook, with only the remaining 40% going to other online players. While online advertising in Asia is forecast to grow at a modest pace (from 24% of worldwide online advertising in 2010 to 26% by 2015) the mobile advertising market is really taking off. By 2015 Asia is expected to account for one-third of the mobile advertising market globally.
At the same time, the report also reveals the dark side of India’s online payment and credit card penetration. On both fronts, India stands at an abysmally low penetration of 2% compared to South Korea, Taiwan and Singapore. The Report also comes down heavily on internet censorship that is acting as an impediment to growth.
The report states, “Asia is still finding its way with respect to governance and regulation of the Internet. In some markets such as Vietnam regulation is mostly undeveloped, which can be seen as a blessing since it allows companies to move quickly and freely. In others, such as South Korea, there are stricter regulations which operators say hamper their business. The one area where ample regulation is in place is around liability for carrying content that either contravenes laws or is otherwise frowned upon. These often poorly worded or confusingly interpreted pieces of legislation create uncertainty for business owners, as well as high administrative costs in order to put safeguards in place. India, Thailand and Malaysia stand out as places where censorship is on the rise.”
Speaking at the launch of the report, Laurel West of Economist Intelligence Unit said, “India’s regulatory environment has considerable room for improvement. While the Ministry of Communications and Information Technology is responsible for the frequent issue of laws relating to Internet governance, there is no specific regulatory body for content and platform creators. Some, particularly smaller operators, take this as a good thing, since it means fewer barriers to entry, particularly compared with manufacturing and other over-regulated industries. But the downside is that there is no central avenue for communication with businesses that will be affected by changes in the law”.