India's internet economy to grow to $200B by 2020: BCG & IAMAI report

India's internet economy will grow to $200 billion by 2020 and will contribute 5 per cent to the gross domestic product (GDP) of the country, according to a report by the Boston Consulting Group (BCG) and Internet and Mobile Association of India (IAMAI).

Internet economy here refers to e-commerce businesses, online content generation and overall digitisation spends of the country. This economy was worth Rs 3.6 trillion in 2013 and it contributed 3.2 per cent to India's GDP.

The report also mentioned that the country's internet user base will cross 500 million by 2018, with rural internet users alone being almost 210 million. India currently has about 300 million internet users and is expected to overtake the US as the second-largest internet base in the world soon.

It is also the third country in the world to have over five internet companies valued at over $1 billion. These include Flipkart, Paytm, MakeMyTrip and JustDial, among others.

"The report is based on a survey that was done over the last three years. It included 25,000 consumers and over 100 product categories," said Alpesh Shah, senior partner and managing director, BCG.

"The extent of shift will depend a lot on how the government and the industry come together to unlock the true potential of the internet," he added.

The report also said that by 2018, 54 per cent of the internet users in India will be over 25 years of age. In 2013, 60 per cent of them were under 24 years. Mobile phone would be the primary mode of internet access for 70-80 per cent of the users by 2018, while 40-50 per cent of overall internet usage will come from rural India.

(Edited by Joby Puthuparampil Johnson)