This is a guest post written by Tarun Balram, head of Capital Financing for HSBC India.  Broadband internet connectivity, considered a luxury some 10 years ago across India, is spreading fast, this time through mobile phones, and is set to overhaul the country’s digital economy.  Cheaper smartphones and a ballooning telecommunications industry have together pushed India to the cusp of digital revolution. Today, India has 243 million internet users – more than the United States and second only to China.  And they are leapfrogging traditional desk-bound technology. Facebook, the world’s biggest social networking site, says that it has more than 100 million users in India, of which nearly 84 million access the site through mobile phones. This suggests the rise of the “mobile first” generation of internet users.  India is getting richer and phones are getting cheaper. Domestic producers are now selling smartphones for as little as $70, and have captured nearly 50 percent of the market. They are selling Android-based handsets in villages so remote that even basic necessities like access to safe drinking water is a major challenge.  In the past, the lack of a high-speed broadband network and the cost of computers hampered the internet’s reach in India. In addition, the strength of the country’s traditional media means that many people continue to rely on newspapers and TV for information and entertainment rather than seeking out digital content.  However, with the rapid spread of high-speed mobile data, that is changing fast. India’s internet contribution to GDP could increase from 1.6 per cent in 2012 to between 2.8 per cent and 3.3 per cent by 2015, according to McKinsey.  The widespread use of English on Indian websites has made it easier for global companies to enter the market, which has given consumers a much wider choice of applications and boosted local application developers and technology start-ups.  The growth of the local online industry is being amplified by the return of talent from overseas. Indian-born engineers have played a key role in the success of Silicon Valley. Many are starting to look back, investing resources and expertise in one of the world’s fastest growing online markets.  As more Indians start using the internet on phones, they are gaining access to products and services that were otherwise tough to find or access. The internet has revolutionized travel, education, retail, and agriculture across the world, but the combination of India’s unique characteristics and the leap to mobile is accelerating a particularly profound shift on the subcontinent.  Booking a rail or plane ticket once took hours of queuing, or paying an agent. Today, the government’s railway ticketing website is biggest e-commerce portal in the country.  Numerous coaching classes and computer training institutes have developed on-line platforms for students who no longer need to travel to bigger cities for education or training. The internet has also helped Indian farmers, who can use their cell phones to find real-time information on commodity prices and then dispatch their produce to the appropriate market, which gives them higher returns.  Scenting market opportunity, overseas companies are taking an interest, particularly in retail. Despite restrictions on foreign direct investment in the sector, eBay has invested in Snapdeal, while Amazon launched an online marketplace last year.  As more and more Indians access the internet, this connected revolution will gather momentum, changing the shape of the economy and helping to cut costs and improve choices for consumers.  India is the new e-frontier. A rapidly expanding middle class, with smartphones in hand and cash in their pockets, are looking to the future and finding it online.
The explosion of mobile phone use in India has started a revolution that could fuel substantial economic development.