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Despite more time spent online, internet growth in India ‘Almost Flattened’

Senior media analyst Vanita-Kohli Khandekar writes that the reason is smartphones. Their prices have shot up sharply and so the uptake of smartphones at the middle and lower end has stalled and directly resulted in dampening the growth of the internet.

There has been a fall, not compensated by the usage or time spent online, which has continued to grow by double digits.

“From the last two years, the organic growth rate of smartphones has stalled. There has been degrowth, we are back to 2019 levels,” Navkendar Singh, associate vice president, devices research, IDC told the newspaper. Its data shows that the Indian smartphone market declined 10% year-on-year in the third quarter of 2022 (July-September). This was the lowest third-quarter figure since 2019. “The internet economy is smartphone-based and overall the smartphone base has not increased,” according to Singh.

There are over 837 million internet users in India. The Minister of State for Electronics & Information Technology and Skill Development & Entrepreneurship, Rajeev Chandrasekhar, had said last month that India is “the largest ‘connected’ nation in the world today with more than 800 million broadband users”. Out of these, about 600-630 million, just under 80% use smartphones.

For a majority of Indians, the smartphone is the gateway to the internet, whether for entertainment, eg. watching movies or accessing music, communicating with friends and family via video calls, or for work, holding meetings online. Affordable smartphones had revolutionised internet usage in India, but conversely, since the pandemic, the sharp rise in their price has dampened internet growth. Supply constraints of chips vital for manufacturing smartphones have resulted in steep prices and the average price at which smartphones are sold have climbed to between Rs 16,000 and Rs 20,000. The supply of chips and other components will take time and is unlikely to get easier in the immediate future.

Vanita-Kohli Khandekar concludes: “Since people who already own smartphones are in any case watching more films, shows or doing meetings etc, time spent continues to rise. In the medium-term then, the impact on media consumption, advertising spends or subscription growth is not yet discernible. But if growth at the entry level doesn’t pick up this year, there is only so much existing broadband users can consume.” TheWire

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