Every year, at the start of summer, Mary Meeker of Kleiner Perkins produces a detailed report on internet trends. There is a lot of detail. And when I say "a lot" I mean that this year's report is 355 slides long. I covered most topics in my post two days ago Meeker on Internet Trends . Yesterday it was Meeker on Internet Trends in China , and today it is India's turn. The Big Picture As you can see from the above left chart, India is the fastest growing economy last year, just narrowly beating out China. They are now the seventh largest economy. Of course, with a population of 1.3B, their GDP per head is fairly low, as you can see from the above right. India is still a poor country, albeit with a growing middle-class. Of course, for electronics and semiconductors, what is important is the growth of usage of mobile phones and the internet. The above chart shows the growth of monthly active users. With 27% penetration and 355M users, India is second only to China. Other metrics, such as time spent on smartphones, are also growing fast. Smartphone shipments have plateaued in India, as they have in much of the world, growing 29% in 2015 but only 5% in 2016. One challenge is that the cost of the phone and, especially, a data plan, is out of reach for a majority of citizens. The trends are in the right direction though. A smartphone is now about 8% of Indian GDP per capita, down from over 30% in 2009. Although 64% of people in India are aged under 35, 72% of internet users are. The above graph shows the cost of a 1GB data plan in terms of GDP per capita. Received wisdom is that 2% is a threshold below which Internet growth will really take off, and India is now down to about 1.5%. The mobile market has got intensely competitive in all areas: hardware, carriers, mobile services. In the last three years, Chinese phone vendors have attacked the market and grown to over half the market, largely at the expense of Indian suppliers. The competitiveness among the carriers is seen in the fall of data plan prices. But the big game-changer is Reliance Jio, which invested $25B over the last seven years and has now rolled out an LTE network across the whole country. They have slashed data prices. The above graph shows the incumbents cutting prices by 50% but still being many times the price of Jio (the blue dot in the bottom right). eCommerce There are companies other than Amazon in eCommerce in India, such as Flipkart, Shopclues, Paytm, and Snapdeal. But Amazon is investing heavily. The number of SKUs (stock keeping unit, basically items for sale) is 80M and they now have 25 fulfillment warehouses. Digital-Focused Government Policies Madhavi Rao wrote about some of the government policies in her post Welcome to the India Circuit . Narendra Modi was elected Indian prime minister in May 2014. Since then, he and his government have rolled out several policies that directly and indirectly affect the electronics industries in India: 8/14: "Banking for All" - Approximately 280M new bank accounts opened to deliver financial services directly to the underbanked in an effort to bypass corruption 6/15: Skills and Entrepreneurship - A dedicated ministry to upgrade youth skills and train 100M new workforce entrants per year 7/15: "Power for All" - Rural electrification with the goal to electrify 100% of villages by 2019 (133M households connected to date with 45M remaining) 7/15: "Digital India" - Digital delivery of land records, income tax filing, and other government services 1/16: "Startup India" - High-level support of Indian startups with both funding and fast-tracking regulatory support 11/16: Demonetization - About 85% of paper currency replaced overnight with clean money and digital payments 2/17: Infrastructure enhancements - $59B targeted to upgrade airports, railways, and roads 3/17: GST tax reform - Bringing India closer to being a true single market A big development has been digital identity, based on biometrics (fingerprints and iris). This provides digital authentication for over a billion people through two services called Aadhaar and eKYC. The growth has been explosive in about the last year, as you can see from the above graphs. Six years ago there were no digital identities and now it 1.1B people, 82% of the population. Before digital ID it took one to three days to activate a mobile phone, now it is 15 minutes. Opening a bank account was a painful process involving visiting the bank and producing paper documents, now it can be done on a smartphone. Before digital ID, pensions and other government payments were done with paper money, and suffered from what is euphemistically described as 'leakage to government officials." Now, the amount of money reaching the true recipients is up 12-15% due to reducing said leakage. Reimagining The graph on the right shows the time spent per week on various media. TV and print are almost in the noise compared to mobile use. The use is roughly one-third search, social, and messaging, one-third entertainment, and one-third everything else (finance, shopping, etc). But with the huge percentage of time spent on mobile, it makes sense to create content for mobile, and indeed that is happening: millennial-focused, short form, made for sharing on social media. Jio's rollout of really cheap broadband is also a driver of all of this, of course. Education is another area undergoing change. India has the largest school system in the world, with over 250M students plus additional demand for after-school education (for example, 37% of secondary school students are also enrolled in some form of private coaching). But increasingly, education is being delivered by mobile, self-paced and on-demand. Apparently learning outcomes are improved by 15%. Healthcare is another area where mobile is making inroads. Nearly 90% of healthcare expenses are paid out-of-pocket in India, as opposed to by a third party such as an insurance company. But increasingly health-hubs are lowering the friction (and the prices), with lab tests at half the cost, and prescription drugs down up to 30%. Marketplaces are also being disintermediated. Even something as perishable as fish can now be sourced direct from the fisherman, resulting in a saving of 25% or so. Employment There is a big challenge in creating enough employment. The graph above to the left shows employment against the population of working age, with the big increase coming as children age into the working population. India lags a long way below other countries in female labor force participation, too, as you can see from the graph to the above right. India Summary For More Details If you want all the details then you can read the entire report. Sign up for Sunday Brunch, the weekly Breakfast Bytes email.Image may be NSFW.
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