Thursday, April 9, 2015

India's stuttering internet revolution


India's stuttering internet revolution

India is posed to over the US in number of internet users, but has the lowest broadband speeds in the Asia-Pacific region








The year 2015 is supposed to be a seminal year for thein India.

This is the year is supposed to overtake the US—it may already have, but there are no data, only estimates—and become the world’s second-largest user of the Net, with active internet users predicted to reach 269 million by June 2015. Claimed users are higher, with a figure of 302 million.

Here’s the rub: No more than 20.08 million actually use 3G, or third-generation mobile services (seven of eight Indian users access the Net on mobile phones), essential to viewing and sharing multimedia content.

The average in India is 2 Mbps (megabits per second). This puts India at a rank of 115 globally, lowest in the Asia-Pacific region, according to a report by Akamai Technologies, a US technology company.
1desk
SourceAkamai

2desk
SourceAkamai

With the Internet now seen as having a positive effect on education (but a negative impact on morality), in emerging nations, its spread would appear to be particularly important for India, but a new Pew research report also classifies India as having low Internet usage.

The so called explosive growth of the Internet (in India) is a misnomer,” said Osama Manzar, founder-director of the Digital Empowerment Foundation (DEF), an advocacy group. “Internet growth in India is still not exponential, it is going up step by step, not multiplying, as is being projected.”

More than 80% of Indian Net users are what Manzar called “static users”, or intermittently connected. Only between 2% to 5% of users are regular, which means their daily lives depend on the Net, which they use to contribute to the economy, he said.

“Wired broadband is quite insignificant in India,” said Prasanto Roy, a commentator on information technology. “It has not been an economic success. Of approximately 15 million wired broadband users, about 7-8 million are corporates and private-sector organisations.”

An ambitious government project to universalise broadband also struggles with access speeds.
 
In October 2014, the Centre started the National Optical Fiber Network, to bring broadband to 250,000 gram panchayats (village councils). A state-owned company, Bharat Broadband Network Limited, was created to implement the project.

Connectivity is patchy—at best. Only 67% of panchayats, in the pilot phase, were actually connected to the national fibre network (20.5% had no connection at all), but no more than 45.5% of panchayats had access to services, said a December 2014 DEF study.

Rajnish (he uses only one name), a technology entrepreneur, said there were two ways to improve India’s broadband situation: Allow private operators to use the fixed subscriber lines of state-run telecommunications companies to provide internet access; and cut taxes to private service providers.

“But overall, I believe, investing in fixed-line broadband internet doesn’t make sense,” said Rajnish.

India also struggles with broadband on mobile internet services.

With an average speed of 1.7 Mbps, India ranks below Thailand, China, Hong Kong and Singapore. Globally, India ranks better than Brazil but falls behind other major economies.

“About 60 million mobile users are intermittent 2G users, who mainly use Facebook and WhatsApp applications once or twice a day,” said Roy.

3desk
SourceAkamai

4desk
SourceAkamai
There’s no dearth of demand for broadband. India is the fastest-growing smartphone market in the Asia-Pacific region, with smartphone sales estimated at 53 million in 2014, compared to personal computer sales of 9.6 million.

Speeds may only increase if 4G, or fourth-generation services, become widespread. Reliance Jio isexpected to launch its 4G LTE services across 800 cities in May/June 2015. But it had acquired spectrum, or telecommunication airwaves, almost four years ago and was waiting for clarity in telecom policy and better technology.

In response to Reliance Jio, and with a possible objective to gain an early edge, Airtel, which offers some 4G services, has also speeded up up its roll-out plans.

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Wednesday, April 8, 2015

Online retail revenue to match income from online travel by 2016

Online retail revenue to match income from online travel by 2016
Mobiles and mobile phone accessories contributed 41%, or about Rs.9,936 crore, to the overall e-tailing pie, followed by apparel, footwear and personal items, which contributed 20%, or Rs.4,699 crore. Photo:New Delhi: The digital commerce MARKET  in India is expected to touchRs.1.08 trillion by 2015-end, a 33% increase over a year ago, according to the 2014 Digital Commerce report by the Internet and Mobile Association of India (Iamai) and IMRB International, a MARKET research firm.
The market grew 53% year-on-year (y-o-y) to Rs.81,525 crore by December end, the report said.
According to the report, about 61% of the entire digital commerce market in 2014 comprised online travel, while 29% came from e-tailing.
Online selling, or e-tailing, grew around 1.4 times over 2013. “Online travel in India, over the years, has been the largest digital commerce segment in terms of revenue generation. However, online retail is catching up fast and is expected to match online travel in revenue by 2016,” according to the report.
“Given that retail is a much larger segment, it is natural that online retail will eventually catch up with online travel,” said Dhruv Shringi, co-founder and chief executive of Yatra, an online travel firm.
However, he believes the penetration levels for online travel will remain high because the sector is more service-oriented and is a friction-less product, when compared with selling products online.
According to Shringi, the online travel industry is growing at 35-40% y-o-y.
Mobiles and mobile phone accessories contributed 41%, or about Rs.9,936 crore, to the overall e-tailing pie, followed by apparel, footwear and personal items, which contributed 20%, or Rs.4,699 crore.
“The penetration of e-commerce is growing rapidly. Of the total smartphones sold, 8-9% of sales are already happening online,” saidRadhika Aggarwal, co-founder of Shopclues.com, an online marketplace.
Consumer durables, along with kitchen appliances, contributed 14% orRs.3,404 crore. The remaining Rs.2,780 crore came from personal computers, including laptops, net books, tablets and close to Rs.1,059 crore from home furnishings. Books contributed about Rs.648 crore in 2014, according to the report.
The report also says 45% of online shoppers prefer cash on delivery as a mode of payment while 21% opted for debit cards and another 16% CREDIT CARDS. The other modes of payment include net banking and prepaid cash cards, mobile wallets, etc.
The FINANCIAL services MARKETgrew at a compounded annual growth rate of 20% since 2010, the report stated. In December 2014, this market was valued at Rs.4,508 crore. The classifieds market was valued atRs.896 crore by the end of calendar year 2014.
Other online services which include online entertainment ticketing, online commuting, food and grocery delivery, registered a compounded annual growth of 73% since 2010 and were valued at Rs.2,025 crore by December 2014.
There are 232 million Internet users—who go online at least once a month—in India, according to the Mobile Internet in India 2014 report released in January.
Out of these, about 66.7 million Internet users have actually transacted or bought products and services over the Internet.

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Wednesday, March 25, 2015

India: Insurance market to quadruple to about US$250 bln a year by 2025

India's insurance sector is expected to quadruple to about US$250 billion over the next decade from around US$60 billion at present, according to a study by the Confederation of Indian Industry (CII) prepared in partnership with consultancy firm McKinsey & Co. The report said that the Indian insurance industry is currently the 16th largest market in the world and is expected to be one of the top 10 markets by 2025. .

The study, “India Insurance Vision 2025” recommends an inclusive and progressive growth strategy for the industry . Such a strategy would enable the Indian life insurance industry to achieve 12% compounded annual growth rate (CAGR) to reach US$160 billion and the non-life insurance industry to see 22% CAGR to US$80 billion over the next 10 years, the report said. .

“The last few years have been challenging for the industry with declining growth in life insurance premiums and significant challenges in non-life profitability. This was driven by a combination of macroeconomic factors and structural challenges inherent in the insurance industry. “However, an improving economy with potential regulatory reforms and concerted action by industry players can usher in an era of significant growth as well as value creation,” the report added. .

Mr Analjit Singh, head of the CII national committee on insurance and pensions and Chairman of Max India, said that the industry has the potential to grow three to five times in size over the next decade. "For this to happen, policy action by the regulator, collaboration between players, and the individual player's push to develop distribution and technical capabilities, would be critical," he said.

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Government raises FDI cap in insurance sector to 49%


Nearly two months after promulgating an ordinance to usher in long-stalled reforms in the insurance sector, the government on Friday notified the Indian Insurance Companies (Foreign Investment) Rules, 2015, to raise the composite foreign investment ceiling in the sector from 26% to 49%.
The rules also will ensure that ownership and control shall remain at all times in the hands of resident Indian entities, a finance ministry statement said.
The 49% cap will also apply to insurance brokers, third party administrators, surveyors and loss assessors and other insurance intermediaries, it added.
The ministry said though FDI proposals up to 26% of the total paid-up equity of the Indian insurance company shall be allowed on the automatic route, proposals which take the total foreign investment above 26% and up to 49% shall require FIPB approval.
These rules will come into force from the date of their publication in the Official Gazette. Raising the foreign investment limit is expected
to generate inflows of $6-8 billion in the insurance sector that is looking for growth capital. The capital requirement of the Indian insurance industry is estimated at $12 billion by 2020.
Foreign portfolio investment in Indian insurance companies will be governed by the FEMA Regulations, 2000 and the SEBI (Foreign Portfolio Investors) Regulations. Any increase of foreign investment of an Indian insurance company shall be in accordance with the pricing guidelines specified by RBI under the FEMA.
British health insurance company Bupa had recently announced plans to hike its holding in its Indian joint
venture to 49%, making it the first foreign company to go for the 49% limit after the change in norms.
Lamenting the Opposition’s obstructionist stance in Parliament, finance minister Arun Jaitley had earlier hinted at the government’s intent to convene a joint session of Parliament to raise the foreign investment limit in insurance companies to 49% from 26% if Parliament fails to pass the Insurance Laws (Amendment) Bill, 2013, even in the Budget session.
The Modi government, which accepted all recommendations of the House’s select panel on the insurance Bill, hanging fire since 2008, could not introduce it in the 245-member Upper House.
According to the House panel, the domestic insurance sector needs Rs 55,000 crore over the next five years.
Foreign insurance companies having operations in India through joint ventures with domestic firms include Netherlands-based Aegon, Canada’s Sun Life Financial, Italy’s Generali, Prudential of the UK and Nippon Life Insurance.
All are believed to have expansion plans in the country and others are planning to set up shop.
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