To much of the outside world, India is still viewed as a developing country immortalized in box-office classics like Slumdog Millionaire and the novels of Salman Rushdie. While poverty levels and economic inequality are undoubtedly high, India is witnessing a developmental phenomenon unseen elsewhere in the world, with different economic groups developing at starkly different rates, in the same country, at the same time. And this is starting to attract outside attention from some of the biggest players in the market.
On one side of the spectrum we have the “first India,” a nuclear- and space-exploration power, home to a bustling tech and startup ecosystem,the world’s most active Whatsapp user base, second-largest network of Facebook users, and early adopters of high-street western brand technology. At the same time, we have the “second India,” which — while still experiencing crippling poverty — is now at the cusp of joining the global digital community, thanks to advances in the mobile internet and increasingly affordable mobile technology.
While this huge section of Indian society is still ‘playing catch-up’ with the west, if recent growth and development trends are anything to go by, within the next three to five years, India, which is already the world’s fastest growing large economy, could effectively add hundreds of millions of potential new, digitally savvy consumers to its team sheet. After being “written off” for many years by industry leaders, tech giants like Facebook, Ebay, Uber, Amazon and Apple are all now targeting India as their next big market.
But how will this pan out for India? Is it set to become the world’s next tech superpower, or a digital colony for western brands?
TAKING HEED OF THE TWO INDIAS
For first time visitors to India, the “in-your-face” poverty prevalent in major cities may make it difficult to believe that the situation is improving rapidly, even for lower income demographics.
Normal life for hundreds of millions of Indians is like a time-machine to decades past. Print newspapers are still the main source of information, many cinemas still use single-screen projectors, and bicycles along with rickety outdated and overcrowded public transport are the norm.
However, when you scratch below the surface, India has witnessed a positive shift since the start of the 2000s. If economic growth continues at the same rate, the World Bank predicts India could be the world’s 3rd largest economy within the next 10 years, and perhaps the largest by 2050. While millions of Indians still manage to live on just a few dollars a day, things are moving in the right direction. The GDP per capita has skyrocketed in India since 2000, and literacy rates have risen by nearly 10% in just ten years currently sitting at more than 70% of the population.
As young people become literate, one of the first things they do is start reading newspapers. In stark contrast to the western world, where print media is in a downturn, vernacular newspapers remain extremely popular. However, with smartphones becoming cheaper — some new companies claiming to have developed smartphones available for as little as $4 and several high quality handsets available in the $ 50 to $100 range — and more accessible, lower-income demographics are picking up smartphones with gusto too.
India finallybroke the $1500 GDP per capita mark back in 2014, and as a result, we are likely to witness a period of extreme change in the near future. With rising wages and literacy comes a desire for self-improvement, and a demand for basic necessities taken for granted in other parts of the world, such as education, communication and medical care. Throw access to internet and affordable technology into the mix, and this group has a lot of potential.
At the same time, in the ever-expanding urban hubs you will find a “first India.” The majority of Indians from upper-middle-class and upper-class demographics live in a world practically identical to their counterparts in the USA or Europe. Many will have traveled and even studied abroad, and are totally connected socially, culturally and digitally with the outer world. Members of this class have a high level of fluency in English, watch movies and series on Netflix, communicate with their friends via Whatsapp, own a range of digital devices and are active users of Facebook and other social media platforms.
The digital revolution is well underway in India, but in line with the paradoxical nature of so much of life here, it has the highest internet growth rates for a country of its size but lowest internet saturation. While only 26 percent of the Indian population accessed the internet in 2015, India is close to replacing the US as the second largest enabled market sitting at just under the 300-million-Internet-users mark and set to grow to at least 560 million users by the end of 2019.
The biggest growth in internet penetration is via mobile, with reports suggesting there are nine times as many smartphone owners as computer owners in India. The mobile market is booming in India, facilitated by a strong, affordable Android market. 249 million mobile internet users are predicted by the end of 2016.
First and second India may seem decades apart, but technology is slowly but surely closing the gap.
ALL EYES ON INDIA
Adding to homegrown initiatives such asDigital India, which aims to bring broadband internet to regional towns, the world’s biggest tech giants are battling for control of a market much bigger than the U.S. Google is launching their balloon powered Project Loon; Microsoft is working on ‘White Space’ tech; Facebook has been exploring how to increase wireless internet in hard-to-reach zones with drone technology, but recently suffered a devastating setback with the Space X Amos-6 satellite explosion. The Indian government also recently rejected Facebook’s Free Basics internet scheme on the grounds ofviolating net neutrality.
Amazon avoided India at first, but after it launched officially three years ago, it has rolled out Amazon Prime at just under$8 per year, reaching out to hundreds of millions of potential consumers. Bezos played his cards right, and has just invested an additional $3B this year, with India becoming the fastest growing Amazon market in the world.
The same goes for Apple which, while available via third party vendors, held off launching the iPhone and iWatch directly in India until 2016. But India is now set to become one of Apple’s fastest growing markets. Apple CEO Tim Cook recently announced that the company was in talks with the Indian government to open branded stores in the near future, but reports claim that talks are being slowed bylocal sourcing policies, which Apple are unlikely to want to adhere to.
DOOR LEFT OPEN FOR DEVELOPMENT OF DIGITAL COLONY
While the Indian government might be putting their foot down about smaller issues such as local sourcing and policy technicalities, civil servants opened up the digital landscape too much and allowed too many big foreign companies in before the Indian digital baby had even learned to walk. As a result, India has failed to develop its own home market for tech innovation.
If previous trends are anything to go by, India is unlikely to forge a place as the next tech superpower. To date, the Indian tech scene has been doing a great job of cloning western tech for the domestic market, and then being acquired by the big global tech giants when they decide to jump on the Indian bandwagon. In general, it has been lacking in genuine laboratory-level innovation.
With the rise of mobile internet use we are sure to see more Indian app successes in the future, but their chances of making it on a global market are slim. The realities of the Indian market, and the financial limitations of their consumers, makes it difficult to develop brands which can scale enough to go global.
Take the case of on-demand car share apps. Homegrown Olais still beating Uber in terms of market share, as it is available in more cities in India and has allowed cash payments. However after complications with the Chinese government, Uber is now focusing more on India, and has adapted the service to make it more attractive to the Indian consumer. The Uber takeover is being slowed by regional technicalities, but the future isn’t looking bright for homegrown taxi apps in India.
The same goes for Flipkart in its uphill battle to beat Amazon. The Indian e-commerce site grew organically, but since the Indian launch of Amazon and now Amazon Prime, is struggling to keep its head above water and was recently highlighted as one of the “5 Indian Unicorns least likely to survive”.
On the flipside, Indian laws restrict foreign investment in media channels such as radio and TV, harking back to India’s desire to “protect” the free press. Consequently India is home to massive multi-billion dollar media companies which are able to compete with Murdoch’s empire and huge brands like Disney. This period of “early-stage protection” was not provided to local internet companies.
Nonetheless, the future looks bright for India, and one can only hope that government legislators will fight tooth and nail to make the digital colony provide as many benefits to Indians as possible, demanding local sourcing requirements, and offices, distribution centers and stores be set up on Indian soil to provide jobs and contribute to the economy. However, this is not the first time that foreign entities have placed themselves in India in the name of positive change, but one can only hope this time will be more beneficial on both sides of the table.
Mashable
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