What is digital india theme all about?

What are macro-economic factors driving digital india theme trend?

• Government of India launched a campaign “Digital India” in order to ensure the Government's services are made available to citizens electronically by improved online infrastructure and by increasing Internet connectivity or making the country digitally empowered in the field of technology.

• The smartphone users in India are likely to rise to nearly 83 crore by 2022, (as per ICEA). As of December 2019, India’s total smartphone user base was 50 crore, with 40% of the user base hailing from rural India.

• By 2025, core digital sectors such as IT and business process management, digital communication services, and electronics manufacturing could double their GDP level to $355 billion to $435 billion. Newly digitising sectors, including agriculture, education, energy, financial services, healthcare, logistics, and retail, as well as government services and labour markets, could each create $10 billion to $150 billion of incremental economic value in 2025 as digital applications in these sectors help raise output, save costs and time, reduce fraud, and improve matching of demand and supply.

• The government has enrolled more than 1.2 billion Indians in its biometric digital identity programme, Aadhaar, and brought more than 10 million businesses onto a common digital platform through GST.

Why is digital india theme attractive now?

• Competitive offerings by telecommunications firms have turbocharged internet subscriptions and data consumption, which quadrupled in both 2017 and 2018 and helped bridge a digital divide. India’s lower-income states are growing faster than higher-income ones in internet infrastructure and subscriptions.

• The smartphone penetration has resulted in emergence of companies offering services just a single tap away. This ease of doing business/ availing services has further increased the need for going digital. The annual Gross Merchandise Value (GMV) has reached to $38 billion in 2020 (vs $22 billion in 2018).

• UPI transaction value has increased ~105% in value from ~2.02 lakh crore in December 2019 to 4.16 lakh crore in December 2020. At the same time, the volume of transactions over the last year grew by 71%. This comes with intense competition among third-party app providers like PhonePe, Google Pay, and Paytm.

What industries/ sectors benefit from digital india theme?

• Currently, India is the world’s 2nd largest telecommunications market with a subscriber base of 1.16 billion and has registered strong growth in the last decade. The Indian mobile economy is growing rapidly and will contribute substantially to India’s GDP going forward. In 2019, India surpassed the US to become the second largest market in terms of number of app downloads.

• The number of internet subscribers in the country increased at a CAGR of 21% from FY16 to FY20 to reach 743.19 million in FY20. Total wireless data usage in India grew 11% quarterly to reach 25.37 TB in Q1FY21.

• The Indian E-commerce market is expected to grow to US$ 200 billion by 2026 from US$ 38.5 billion as of 2017. Much of the growth for the industry has been triggered by an increase in internet and smartphone penetration. As of August 2020, the number of internet connections in India significantly increased to ~760 million, driven by the ‘Digital India’ programme. Out of the total internet connections, ~61% connections were in urban areas, of which 97% connections were wireless.

• Telecom infrastructure plays a crucial role in digitalisation of the country. India optical fiber cables market stood at $ 881.5 million in 2019 and is projected to grow at a CAGR of 19.7% to reach $ 2.1 billion by 2024. The growing demand for OFC from IT & telecom sector, rising number of mobile devices, increasing adoption of FTTH (Fiber to the Home) connectivity and surging number of data centers are further anticipated to fuel optical fiber cables market in India over the coming years.