The Multi-Billion $ Future Of Digital India
It’s not just because Reliance Jio, the $15 billion
investment off the Reliance cash balances, just launched, has made an
aggressive pitch towards instant market leadership.
Jio is offering free ‘voice’, while charging for data usage,
the real revenue McCoy, but in small chunks, for little money, so it doesn’t
pinch.
In the end, Jio won’t take in less in aggregate, but will do
so with better lures. Will it appropriate
Modi’s Digital India vision unto itself? Well, the backbone of it, could
well be the smartphone, unless someone comes up with a better widget.
It’s clever stuff, this battle for the concept definition
itself, but is cellular telecom the lion’s share of it?
Jio will need 80 million subscribers paying at least Rs. 180
per month in usage fees for it to break-even. However, the 60 year old Mukesh
Ambani says he’s not going to lose money on Jio for sure.
Others are grudging the flood of interconnectivity they have
to provide the new Jio riders, but, as the man says, for how long? It’s illegal
to refuse.
The notion that the smartphone will rule the bandwidth is
fuelled and reinforced by the Mobile App, the medium through which a lot of
digital traffic/eCommerce is growing, rather than via the older laptop/tablet
formats.
Even if mobile telecom isn’t synonymous with Digital India,
the internet certainly is; and 3G, 4G and 5G speeds, plus fibre-optic cabling,
will continue to batter down the dimensions of both time and distance.
Money, they say, never sleeps, but neither does the
eCommercial marketplace. It is awake for the insomniac, and never takes a day
off.
Jio could well be the blockbuster service provider, given
the potential of the Indian telecommunications market. It already boasts over a
billion cellphones in use, many of which are voice only.
Older people tend to be technology averse, but India is 65%
between the ages of 15 and 35, and this ‘demographic dividend’ will pay out for
at least three decades more.
The smartphones today range from the rapidly bundling
features and upgrading inexpensive variety, to the more aspirational, not so
cheap ones.
People are consuming entertainment, data, advertising, news,
views, music, photos, videos, all on their devices.
They are receiving tax returns, banking information,
governance, subsidies, payments, surveillance, quite often on the move.
And people are forever upgrading to more, for less. Even the
defence of the realm depends on it. Corruption is being curbed via the direct
interface between senders and receivers. It cuts out the rent-seeking
middlemen.
eCommerce already dominates air/train/travel and hotel/car
bookings, offering tighter rates and fares. The entire travel agency business
has morphed into eTravel. It now accounts for 70% of the entire caboodle of
eCommerce.
eTailing, on the other hand, in India was at $6 billion in
2014, out of the $16.4 billion of
the online business. This, with 16% of
India’s population, largely under 35, online in 2013, according to Forrester Research,
quoted By PWC.
Out of this same 16%, only 14% of it, or 28 million people,
were online buyers - for books, accessories, electronics, apparel-constituting
80% of what they bought.
But now, apart from the holdall Amazons and Ali Babas
joining the desi Flipcarts and Snapdeals, there are property portals like Magicbricks, and
multiplying online shops and showrooms for almost everything.
So what is the size and shape of India’s digital future
including the much vaunted smart cities? The kitty was projected to grow to $22
billion by 2015, and five to seven-fold in number of online buyers by 2020. This
means at least 200 million online consumers by then.
If revenue grows at present rates where CAGRs’ are sometimes
in the 30% plus area, the monetary value could become $105 billion, or much
more by 2020.
If 200 million people were to become online purchasers,
perhaps 500 million, rural and urban, would be just browsing online.
Significantly, our online buying penetration is already, in
absolute terms, bigger than most countries, barring China, where 50% of its
much bigger population, is buying online, if not exclusively, today.
The question is why? It is just faster and more cost-effective,
even if it hasn’t realised its full potential yet.
The tentacular Indian post offices are going to join in too,
as the COD last mile, and as payment banks.
But can the online model, pimped out and pumped up on
outrageous valuations, VC funds, and cash-losing discount-selling, survive; let
alone grow, manifold, in just four years?
Yes, because the delivery is potentially fantastic, and just
about everything is clambering aboard!
The American Mall, the quintessential late 20th
century place to ‘hang-out’, is dying. The same thing has been happening in metro
India, though people in smaller towns, coming to the experience later, still
like the razzle dazzle, the bright lights, the airconditioned swank.
But tier two and three towns are also huge internet users,
for hooking up, as much as for selling, or buying.
Premium stand-alone markets in all our metro cities, with
the steep rents, are morphing into upmarket restaurant-land. The retail
footfalls however, are falling.
The office space market too is becoming a special interest
zone- IT, banking/insurance back offices, larger brokerages, consumer sales/
marketing for white goods, vehicles, servicing establishments -need them.
Other high tech 24x 7 establishments, straddling time zones,
use them for the concentrated infrastructure.
But many other small businesses no longer do, pointing to
their cars, smart phones, laptops, memory sticks, and homes, instead.
Manufacturing, except for yesterday’s labour intensive
variety, is also tending towards using fewer people, more machines/robots. Though
robotics is a revolution yet to happen substantially in India, the objective of
greater manufacturing employment may well mean more skilling and high-tech
robotic factories in future, rather than early industrial revolution manual
assembly lines.
Institutions - hospitals, schools, museums, universities,
government offices, still need large places to congregate. But even here, a lot
of what was physical has now gone virtual/digital.
This is inevitable progress, and therefore, a wave to ride,
because there is no ducking it. And watch out, this brave new world ups the
ante every quarter.
For: Nationalist Online
(1,016 words)
September 11th, 2016
Gautam Mukherjee
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