India to boast 500 million internet users by 2017 as Chinese smartphones feed growth

PUBLISHED : Tuesday, 21 July, 2015, 7:49pm
UPDATED : Tuesday, 21 July, 2015, 8:02pm

As Chinese smartphones pour into India and get more people online, the subcontinent is expected to greet half a billion internet users by 2017, up from just over half that many at present.

Web penetration is shooting up as cheaper handsets flood the Indian market, a trend that should see mobile internet users initially jump to 236 million next year, according to a report by the non-profit Internet and Mobile Association of India.

"With more than 300 million internet users, India has the second-largest internet user base in the world," said Ashvin Vellody, a management consultant partner at KPMG India, which co-authored the report. 

"The next wave of growth in penetration of internet will be driven by adoption of mobile internet,” he added, describing the current internet penetration rate of 19 per cent as sub0-standard and limiting. 

With 650 million users in 2014, China boasts the highest number of internet users, and its smartphone makers may play a key role in getting more Indians digitally connected. 

Top-selling Chinese brand Xiaomi has already started to aggressively target Indian customers, even choosing New Delhi for the global launch of its Mi4i device in April. 

At least two more of China’s big tech caps are getting in on the action, with PC and smartphone maker Lenovo expanding in India, and telecoms giant Huawei showing similar ambitions.

Huawei won security clearance last week to manufacture telecoms equipment in the country, with a spokesman saying it intends to become a top three brand in India within three years.

"They're taking the Chinese smartphone food fight abroad, where there is still growth and profits to be made," Alberto Moel, a senior analyst at Bernstein Research, told the South China Morning Post this month. 

"The Chinese smartphone makers, while still relatively small in India, had an impressive 214 per cent revenue growth in the first quarter. They grabbed 12 per cent market share, from 6 per cent a year ago," Moel said. 

"We expect further market share expansion in the next few years."