India ICT Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022-2027)

India ICT Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022-2027)

The Indian ICT market is anticipated to record a CAGR of 14.73% over the forecast period (2022 - 2027). The growing emphasis on digital technology, cyber security, AI, robotics, and healthcare IT is driving the market.

• The ICT sector and digital economy are the economic drives that have significant contributions to India's GDP. India's digital economy creates roughly USD 200 billion in economic value yearly through business process management (IT-BPM), e-commerce, domestic electronics manufacturing, digital payments, digital communication services (including telecom), and other ICT-related activities. India's digital economy is predicted to be worth over USD 800 billion by 2025 (source: IBEF).
• India intends to have a USD 5 trillion GDP and a USD 1 trillion digital economy by 2025. Because electronics are so important in manufacturing, demand for electronic items is expected to reach USD 400 billion by 2025. Unless prompt actions are made to improve indigenous electronic production, the reliance on imports to fulfill the rising demand for electronic goods is projected to expand (source: NITI Aayog).
• Moreover, the communication market is expected to have rapid growth in the coming years. In January 2022, India had 658.0 million internet users. At the start of 2022, India's internet penetration rate was 47.0 percent of the total population. According to GSMA Intelligence, India had 1.14 billion cellular mobile connections at the start of 2022. Between 2021 and 2022, the number of mobile connections in India rose by 34 million (+3.1%).
• Bengaluru (previously Bangalore), popularly known as India's Silicon Valley, Hyderabad, and Chennai are major ICT hubs in South India; New Delhi and Gurugram (formerly Gurgaon), located outside of New Delhi, are major ICT centers in North India; while Mumbai and Pune are major ICT centers in West India.
• While the COVID-19 pandemic impacted India's digital transformation, companies are realigning their IT strategies, managing operational costs, automating processes, and implementing new systems for better and improved efficiencies. Emerging technologies such as robotic process automation, big data, artificial intelligence, machine learning, blockchain, cloud computing, the internet of things, cybersecurity, and augmented/virtual reality are helping to accomplish these goals.

• India has the world's second-largest telecom network. In December 2021, India's overall subscriber base was 1178.41 million. India has the world's second-largest number of internet users. In January 2022, the total number of internet users was 658 million (source: IBEF).
• In addition, telecom penetration, also known as teledensity, has also increased dramatically in recent years. Tele-density has risen from 18.23% in FY16 to 88.177% in FY21. Tele-density was 85.91 percent in December 2021 (source: Ministry of Communications).
• Moreover, investment by foreign players is increasing. For instance, in January 2022, Google invested USD 1 billion in Airtel through the India Digitization Fund. Similarly, under the recently announced PLI program, several worldwide vendors such as Samsung, Cisco, Ciena, Jabil, Foxconn, Sanmina, and Flex have expressed interest in setting up production in India for telecom and networking equipment. Between April 2000 and December 2021, FDI into the telecom sector totaled USD 38.25 billion.
• More importance is given to telecommunication by the government as it is a significant contributor to the country's GDP. The Department of Telecommunications was given INR 84,587 crore (USD 11.11 billion) in the Union Budget 2022-23. Revenue expenditure accounted for 36 percent of total expenditure at INR 30,436 crore (USD 3.99 billion), while capital expenditure accounted for 64.01 percent of total expenditure at INR 54,150 crore (USD 7.11 billion).
• Further, the government allocated INR 14,200 crore (USD 1.9 billion) for telecom infrastructure in the Union Budget 2021-22, which includes the completion of an optical fiber cable-based network for Defense services, the rollout of broadband in 2.2 lakh panchayats, and the improvement of mobile services in the North East.
• Also, wireless subscription has grown robustly over the past few years. The growth in wireless subscriptions has led to a significant rise in wireless teledensity. In FY21, wireless subscriptions stood at 1,180.96 million, and wireless teledensity reached 86.68%. As of December 2021, the wireless subscriber base of Jio stood at 415.72, followed by Bharti Airtel (205.87 million) and Vodafone Idea (122.14 million) (source: Telecom Regulatory Authority of India).

• Information Technology has been witnessing rapid growth in recent period. Moreover, the Indian IT industry's revenue is expected to reach USD 227 billion in FY22, up from USD 196 billion in FY21, according to the National Association of Software and Service Companies (Nasscom). By 2025, India's IT industry is expected to contribute 10% of the country's GDP. The IT industry employs 4.5 million people as of FY21.
• Further, the trend in the adoption of digitalization technology is rising. For instance, according to a survey conducted by Amazon Web Services (2021), India will have nine times the number of digitally skilled workers by 2025. By 2025, it is expected that 3.9 billion digital skill training will have been completed. By 2021, 12 percent of the country's workforce will have received digital training.
• The need for cyber security is being realized due to recent cyber threats faced by the country. For instance, following allegations that Chinese intrusions may have harmed operations at a key stock exchange and electricity supply in Mumbai, India's Ministry of Home Affairs and the National Critical Information Infrastructure Protection Centre are developing a new national strategy to strengthen the country's cybersecurity.
• Further, to boost cyber security skills, the Indian government announced a proposal to create a cyber lab for the 'Online Capacity Building Programme on Crime Investigation, Cyber Law, and Digital Forensics' in September 2021.
• Furthermore, in FY21, India's IT industry exported a total of USD 149 billion. From USD 108 billion in FY16 to USD 149 billion in FY21, the industry's export income expanded at a CAGR of 6.65 percent. Software exports by IT businesses affiliated with STPI (Software Technology Park of India) totaled Rs. 1.20 lakh crore (USD 16.29 billion) in the first quarter of FY22, according to STPI.

The Indian ICT market is moderately competitive and moving towards the fragmented stage as the market currently consists of many players. Several key players in the ICT market are in constant efforts to bring advancements. A few prominent companies are entering into collaborations and are also expanding their footprints in developing regions to consolidate their positions in the market. The major players are Tata Communications, HCL Technologies, Infosys Limited, and many others.

• May 2021 - IBM partnered with 11 top-tier academic institutions, including IIT Kharagpur and the Indian Institute of Science (IISc), Bangalore, to provide 'over-the-cloud' access to its quantum systems in order to promote advanced quantum computing training and research.
• April 2021 - Bharti Airtel Ltd. announced a new corporate structure, incorporating a new telecom business to focus more on digital assets. The telco has established a new company, Airtel Ltd., to house its telecom operations.

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