Internet demand in rural areas to boost India to 1bn smartphone users by 2026

Increased adoption in rural markets is set to take India’s smartphone user base to one billion by 2026, according to a global predictions report by Deloitte. According to the report, titled 2022 Global TMT (Technology, Media, and Entertainment, Telecom) predictions, the adoption of online education, banking and healthcare products is causing a rising demand for internet services in rural markets across India – which could see a cumulative total of 1.7 billion smartphone units being shipped in the country between 2022 and 2026.

According to Deloitte’s predictions, smartphone demand in rural Indian markets will increase at a compound annual growth rate (CAGR) of 6% till 2026, in comparison to a 2.5% CAGR for urban circles. Tier 2 markets and beyond are therefore expected to outpace the growth of smartphone users in metropolitan cities, and the government’s push to roll out fiber broadband connectivity to rural areas through the BharatNet programme is also expected to boost adoption.

In November 2021, the biennial Annual Status of Education Report (Aser) survey noted that the availability of smartphones in rural India saw a sharp rise in effect of the covid-19 pandemic. It stated that while smartphone availability in rural India was 36.5% in 2018, the figure rose to 67.6% in 2021.

Alongside online education, industry reports state that the push for digitising agricultural services, the prevalence of Unified Payment Interface (UPI) and online banking, and features such as the Aadhaar-enabled Payment System (AEPS) that allows paperless banking even without internet, have all contributed to an increasing demand for smartphones in rural markets. Deloitte’s prediction said that fuelled by this, the Indian smartphone market could be worth $250 billion in 2026.

This adoption is already causing rural internet adoption to outpace urban markets, according to a June 2021 report by the Internet and Mobile Association of India (Iamai). The report notes that rural internet users grew by 13% to reach 299 million at the end of 2020. In comparison, urban internet demand grew by 4% to reach 323 million. By 2021, the rural internet user base was expected to be equal or higher than urban users. Deloitte’s predictions, therefore, fall in line with how the Indian internet and smartphone users have grown in adoption – and how it may further grow in the near future.

The report also noted that the years leading to 2026 will also see a heavy growth in 5G-enabled smartphones. Talking about this, Peeyush Vaish, partner at Deloitte India, said, “5G-enabled devices will contribute 80% to the devices being sold in the year 2026, and Indian consumers will purchase 840 million 5G smartphones over the next five years – valued at $130 billion. 5G will also fuel an incremental sale of 135 million smartphone units over the next five years.”

Deloitte’s report also states that the offering of production-linked incentives, particularly in the smartphone assembling space, could push India into becoming the second largest maker of smartphones in the world, thereby contributing to the nation’s export revenues.