Why India’s Internet Growth Has Stalled?

Pic depicting Internet Expansion

Why India’s internet growth has stalled? 790 million wireless broadband customers were recorded by the country’s telecom authority in October 2022. Wireless broadband users are those who access the internet on mobile phones. That was only a hair over a million subscribers higher than what was reported back in August of 2021. After a meteoric rise into the double digits between 2016 and 2020 for the number of mobile internet customers, that growth has now slowed to the single digits.

Smartphones are the primary means by which people access the internet, and this segment of the market is experiencing stagnant growth. There are around 650 million smartphone users in India at the moment, but the rate of growth has halted. According to statistics from Counterpoint, a company that specializes in market research, the number of mobile phones sold dropped to 151 million units in 2018 after reaching a high of 168 million in 2021. This year, it is anticipated that sales will increase by a single digit.

According to the findings of another market research company, IDC, customers were purchasing a new smartphone once every 14–16 months up until around three years ago. However, they are now searching for an update every 22 months.

One of the reasons why smartphone prices have increased since the epidemic is due to growing component costs, a weaker rupee, and supply chain interruptions affecting China, which is the country that produces the most smartphones in the world. It is estimated that about 90 percent of the more than 300 components used in cellphones manufactured in India are imported.

A weakening economy, the loss of employment, and the subsequent compression of earnings all imply that there is less money in people’s wallets to spend on a more expensive mobile phone.
For a market of its size, India is unusually price sensitive: 80% of the devices sold here cost less than 20,000 rupees. The average price of a smartphone is currently about 22,000 rupees ($269; £220), up from 15,000 rupees two years ago.

India has more than 350 million users of “dumbphones,”

This is a significant reason to worry. India, the world’s second-largest mobile phone market, has a smartphone penetration that is nowhere near as high as China’s, which has the largest market. However, India has more than 350 million users of “dumbphones,” which are basic handsets, or feature phones, and these users could potentially upgrade to smartphones if they have the financial means to do so. Nearly half of these individuals make use of technologies that have a purchase price of less than 1,500 rupees.

35 million Indians switched from feature phones to smartphones in 2022

Only 35 million Indians switched from feature phones to smartphones in 2022. If compared to an annual average of 60 million before the advent of COVID, which was a direct result of the increased pricing of both the devices and the data.

Most people don’t think about the fact that there is a thriving, unorganized secondary market that could be meeting the demand for “cheap” cellphones.
The market for previously used items is helping to partially satisfy this need. However, the base is not expanding as much as we would want it to.
The fact that the expansion of the internet is slowing down is not good news for India. Many people will have a more difficult time accessing government welfare payments, rations, and immunizations, among other things, if they do not have a smartphone.

By the year 2025, the Reserve Bank of India wants there to be “less cash and fewer cards.”

Why India’s internet growth has stalled: On the Unified Payments Interface (UPI), a platform for real-time cashless transactions that is supported by the government and uses mobile apps. More than 250 million transactions have been completed every single day so far in just this one month. By the year 2025, the Reserve Bank of India wants there to be “less cash and fewer cards.”

It is quite clear that there is sufficient opportunity for the further expansion of both cellular phones and the internet. The rate at which rural residents are subscribing to wireless internet services has slowed. According to a study conducted by the Internet and Mobile Association of India (IAMAI) and the data analytics company Kantar, the growth rate of active internet use — defined as the percentage of people who have accessed the internet within the past month — has “progressively reduced over the years” and reached its lowest point in the preceding four years in 2020.

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The number of men who use their phones to connect to the internet is growing faster than the number of women who do the same. A significant number of homes in rural areas continue to use a single computer.

The slowdown in the expansion of the internet is not just attributable to the increasing cost of mobile devices. In order to be successful in rural India, most applications and services would need to overcome linguistic and literacy challenges. According to him, the majority of the content on the internet is still written in English, along with a few Indian languages.

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There is an urgent need for new innovative solutions, such as the PayTM Soundbox. It is a battery-powered device that gives businesses with immediate audio confirmation in 11 languages for every payment accepted via the payment app. “We need more innovation in order to boost internet access in India’s rural areas.” However, before that can happen, smartphone sales need to ramp up.

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