PRAGATI: Journal of Indian Economy

Volume 6, Issue 2, July-December 2019, pp. 22-43

doi: 10.17492/pragati.v6i2.187355

Smartphone, Internet and Digitalization in India: An Exploratory Analysis

Debabrata Mukhopadhyay* and Arun Kumar Mandal**

ABSTRACT

This study attempts to investigate the changing face of Indian smartphone market in the
era of internet and digitization being recently observed in the Indian consumer durables
market. In this century, the smartphone is now one of the most useful technological
applications which is changing from feature phone to smartphone market. Global
smartphone user rate is growing rapidly with India becoming the second-largest market.
We attempted to analyse the growth of the smartphone market considering the role of
internet user and digitalization in India following an exploratory approach. The study
shows huge potential of the smartphone market in India with changing shares of
different players in this market. This study also establishes that smartphones are
increasing more rapidly compared to mobile phone market.

Keywords: Smartphone; Digitalization; Internet; India.

1.0 Introduction

The smartphone is now handset of a personal computer with a mobile operating

system and mobile broadband cellular network connection. This device is typically
pocket size. Modern smartphone has a touch screen and colour display. It can function
with a variety of software (known as apps). Today this smartphone fulfils various needs
of the customer for a telephone, digital messaging, digital camera and video camera,
GPS navigation, media players, clock, calculator, video game, flashlight, news, an
address book, note-taking, web browser etc. Most smartphones produced 2012 onward
has high-speed mobile broadband 4G LTE Capacity. The Japanese firm „NTT DoCoMo‟
released the first smartphone in 1999 to achieve mass adaption within a country.
______________________
*Corresponding author; Professor, Department of Economics, West Bengal State University,
Kolkata, West Bengal, India (E-mail: debu1641975@yahoo.co.in)
**Ph.D. Research Scholar, Department of Economics, West Bengal State University, Kolkata,
West Bengal, India (E-mail: mandalarun99@gmail.com)
 Smartphone, Internet and Digitalization in India-An Exploratory Analysis 23

The smartphone was still rare outside Japan until the introduction of the „Danger
Hiptop‟ in 2002, which show moderate success US consumer. Outside the US and Japan,
Nokia was seeing success with its smartphone based on „Symbion‟, Originally developed
by Psion for their personal organizer and it was most popular Smartphone OS in Europe
during the middle to late 2000s. In 2007, the LG Prada was the first mobile phone
released with a large capacity touch screen. In October 2008, the first phone to use
Google‟s Android operating system. By the mid- the 2010s, almost all smartphone were
touchscreen-only and Android and iPhone Smartphone dominated the market
(Wikipedia).
Now India is the second-largest smartphone1 user in the world. India overcomes
the second placer of USA and ranks after China (eMarketer). The number of smartphone
users in the country is expected to be double to 859 million by 2022 from 468 million
users in 2017 growing at a compound annual growth rate (CAGR) of 12.9%. The non-
smartphone ownership in India will decrease from 701 million in 2017 to 504 million in
2022 at a CAGR of -6.4% as more and more people opt for smartphone (Goenka 2019).
The country had 432 million mobile internet user in December 2016 of which 269
million (62.3%) were from urban India and 163 million (37.7%) from the rural area. The
number of internet user in India is expected to reach between 450-465 million by June
2017 (IAMAI & KANTAR IMRB, 2016). The number of Internet users in India has
registered an annual growth of 18% in 2018. The number of internet users is estimated to
be 566 million as of December 2018. By the end of the year, 2019 projects double-digit
growth and estimates that the number of internet users will reach 627 million. Not
surprisingly, 97% of users access the internet on their mobile device (Kantar IMRB
ICUBE 2018). Rural India is growing at a much higher rate than urban India. For the
greater affordability of mobile services in India especially with the launch of Reliance
Jio, The total monthly average mobile bill has decreased over time. This augurs well for
smartphone penetration in the coming days and can pave the path for greater penetration
for rural India as affordable handsets and cheap data plans are available for the lower
level income section of the population (IAMAI & IMRB). Wireless mobile internet shall
play a pivotal role in non-metro and rural areas. Even though the major portion of
wireless internet subscribers is 2G users, the adoption of 4G is gradually increasing. The
digital India initiatives by the government are also expected to be instrumental in driving
the demand for 4G. For these, the government is investing and Reliance Jio has
investment INR 700 bn for allocation of the 4G spectrum where their network would
encompass 6,00,000 villages in India. Digital Banking and cashless transaction are
increasing through the growing of smartphone in India. Therefore, today smartphone is
an essential personal device in the Indian population.
24 PRAGATI: Journal of Indian Economy, Volume 6, Issue 2, Jul-Dec 2019

2.0 Objectives of the Study

The following are the important objectives of this study:

 Assessment of the growth of the smartphone market in rural and urban India
 Finding the importance of smartphone and the internet in terms of digitalization of
India

3.0 Review of Literature

Significant research has been conducted to provide detailed insight regarding

smartphone, internet, and digitization in India. Watkins et al. (2012) worked on mobile
and smartphone use in urban and rural India. The first part of this study based upon
corporate anthropology of middle-class urban user segments with „Mobile Only‟ and
„Mobile heavy‟ in Mumbai and Belgaum. The survey reveals that a mobile phone was
their first personal device that leads to a complex relationship between the user and their
phone, which were manifest of both physical and symbolical. The second part was to
explore the potentiality of the smartphone as a tool for development communication in
the rural Bundelkhand region of Madhya Pradesh Akhtar (2015) studied „Make in India‟
and mobile phone industry in India, and observed the presence of a sustained and
growing demand for mobile phones is a key strength for the industry. „Make in India‟
would attract Indian and foreign investors but strong policy implications is needed to
develop an ecosystem. The study of Shweta (2015) was the promotional strategy in
competitive smartphone market. It was a case study of India and Chinese mobile
handsets companies. This article mainly emphasized the competitive idea of Indian and
Chinese promotional market strategies adopted by their smartphone market companies.
Also, evaluate the factors that are helping the Chinese smartphone to become an Indian
capturing with a low-cost promotional strategy and some segment related issues that
show some promotional weakness of Indian handset companies to promote smartphone.
The study of Abbas and Singh (2015) explained about mobile media penetration.
This study has investigated the growing trends into the usage and acceptability of mobile
as a medium communication in four centrally backward districts of Uttar Pradesh. In
India is exhibiting the transition from features phones to Smartphone rapidly. This is
being accelerated by the availability of low-cost smartphone and data plans, SMS, Email,
Messaging, and social networking apps. Rajkumar et al. (2016) studied mobile use and
data penetration in India. This device is a continuing critical part of the consumer‟s day-
to-day lives. Mobile, mobile internet and mobile technology is a major role player in
realizing the digital vision. There is more media consumption through digital media as
 Smartphone, Internet and Digitalization in India-An Exploratory Analysis 25

people now spent more time on online content consumption when compared to data
consumption through traditional media. The reasons for this rise is due to the
improvement in the field of mobile technology, better internet connectivity, lowered cost
of smartphone and data plans. Saripalle and Mukhopadhyay (2016) worked on mobile
phone penetration, income inequality, and economic growth in India. It was a panel data
study of Indian states. This study attempted to find out the direction and magnitude of
the impact of income and inequality on mobile penetration along with other socio-
demographic variables. It observed that income, inequality population density was found
to have a significant impact on the penetration of mobile phones across Indian states.
The paper of Agarwal and Bhagoliwal (2016) examined the managing technology and
innovation in the mobile handset industry. This study explained on mobile phone
banking, social network through the mobile phone, entertainment appliance in the mobile
phone, and mobile cloud computing. The study attempted to review the post studies to
achieve a better understanding of the importance of management of technology and
innovation with no specific intent to influence the technology and innovation
management process. The study of Contreras and Lakshane (2017) has shown the
potential impact of the patent on the mobile device market in India. This study explained
the Indian telecommunication market, The Indian patent system, and the mobile patent
landscape in India. Indian manufacturers can no longer ignore patents. Foreign firms
already dominate the mobile device patent landscape in India. The aggressive assertion
of the patient by multinational firms against Indian‟s low-cost domestic producers could
reduce the supply of inexpensive mobile devices available to the Indian population,
thereby limiting the many social, health, and economic benefits afforded by mobile
technology. However, no work is done the growth of smartphone and mobile internet
use, as Smartphone is a personal device now, which is the most helpful of digitalization
of India.

4.0 Data and Methodology

The data has been collected from various secondary sources such as Internet and
Mobile Association of India (IAMAI), Indian Market Research Bureau (IMRB), Mobile
Marketing Association (MMA), Nielsen Intelligence, KPMG in India, IPSOS Business
Consulting, IDC (International Data Corporation) India, ICICI Securities, IBEF,
Ericsson, Deloitte, Consumer Voice, Census report-2011, Ministry of Electronics and
Information Technology, National Sample Survey (NSS), rural marketing books in India
etc. This work is an exploratory study of smartphone market penetration relating to
internet and digitization.
26 PRAGATI: Journal of Indian Economy, Volume 6, Issue 2, Jul-Dec 2019

5.0 Growth of Smartphone Market

The rapid upheaval of technology and storming fast internet has led to enormous
growth in the number of smartphone users in India. The smartphone market in India
grew 14.5% in 2018 with a shipment of 142.3 million units. In the previous year,
shipment stood at 124.3 million units (IDC 2019).

5.1 Mobile phone and smartphone user change in India

Today mobile phone and smartphone users are increasing rapidly in India
according to change of lifestyle and all overall environment change. Smartphones are
being used more than a mobile phone. This has presented in Figure 1. From Table 1 and
Figure 1, we observe that in 2014, total mobile phone users were 581.1 million in India.
It was 47% of the total Indian population. In 2019, the mobile user are expected to be
813.2b million which are 62% of the total population in India. The growth of mobile
phone user will reach 39.94% during this period from 2014 to 2019.

Table 1: Mobile Phone and Smartphone User Change in India (2014-2019)

2014 2015 2016 2017 2018 2019

Mobile Phone
Users (Millions) 581.1 638.4 684.1 730.7 775.5 813.2
% of population 47.0% 51.0% 54.0% 57.0% 59.8% 62.0%
% Change - 8.51% 14.89% 21.28% 27.23% 31.91%
Smartphone
Users (Millions) 123.3 167.9 204.1 243.8 279.2 317.1
% of User 21.2% 26.3% 29.8% 33.4% 36.0% 39.0%
% Change - 24.06% 40.57% 57.54% 69.81% 83.96%
Source: eMarketer, July2015 (base year 2014)

In 2014, smartphone user was 123.3 million in India. It was 21.2% of the total
mobile phone user. In 2019, smartphone user will be 317.1% of the total mobile phone
user that is 39% of the total mobile phone user in India. According to GSMA
Intelligence report, smartphone connection was 2% in the year 2010 and it will be
increased to 98% by the year 2020. With the increase in smartphone connection in India,
there will decrease in feature phone connection from 57% to 43%. According to ovum
Telecom Forecast and EY Estimates, smartphone growth rate was 24% in 2014 and 31%
in 2015 and it will have increased to 51% by the year 2018 and 59% by the year 2020.
 Smartphone, Internet and Digitalization in India-An Exploratory Analysis 27

Being dependent on Ericsson mobile report (Heuveldop 2017), 270 million smartphone
subscribers was in 2016 and it will be 890 million in 2022. This growth rate will be
CAGR 22%.

Figure 1: Growth of Mobile Phone User and Smartphone User in India

900
813.2
775.5
800 730.7
684.1
700 638.4
581.1
600
500
400
317.1
279.2
300 243.8
204.1
200 167.9
123.3
100
0
2014 2015 2016 2017 2018 2019
Mobile Phone User(Million) Smartphone user( Million)

Source: eMarketer, July2015 (base year 2014)

Depending on the Telecom Regulatory Authority of India (TRAI), there are 499
million mobile subscribers in rural India (June-2017), which are 109 million users own
Smartphone

5.2 Feature phone and smartphone market share in India

From figure 2, we observed that in 2012, out of the total phone market in India
Feature phone was 88% and the Smartphone was 12%. Smartphone handset market has
grown 12% to 48% and decreased feature phone market from 88% to 52% by the year
2012 to 2017. This suggests that the Smartphone market is now an essential consumer
durables market to the marketers in the context of socio-culture and digitalization.
Nearly 94% of Smartphone owners use Android or iSO. Android is hoping to capture
73% of the market share in 2017 followed by Apple 21% and Windows 4%. [BCR]
28 PRAGATI: Journal of Indian Economy, Volume 6, Issue 2, Jul-Dec 2019

Figure 2: Feature Phone and Smart Phone Market Share in India (2012, 2017)

120%
Fearture Phone Smartphone

100%
12%

80%
48%

60%

88%
40%

52%
20%

0%
2012 2017
Source: Ipsos Business Consulting (n.d.) (India’s Mobile Phone Market)

5.3 Smartphone market share in different company

The Indian smartphone market witnessed a healthy 14 percent annual growth
with a total shipment of 124 million units in 2017. This is the fastest-growing market
amongst the top 20 smartphone markets globally (IDC).Xiaomi, Samsung, Vivo, Oppo,
and Realme are the top 5 smartphone brands in India. Xiaomi is still the number 1
mobile brand in India with a 28% share. Samsung and Vivo have 25% and 11% market
share respectively. Oppo and Realme have 8% and 9% respectively (Jain, 2019).

5.3.1 Smartphone market share of top five companies in India (Change)

There are around 100 types of mobile devices present in the Indian market with
more vendors arriving every quarter of which, the top five vendors (Table 2); Xiaomi,
Samsung, Vivo, Oppo, and Transsion; now accounting for 78.8% of the total shipment in
India. Both Xiaomi and Samsung accounted for almost half of the total market as the top
five vendors continued to post strong growth in the second quarter of 2018 (IDC). India
has piped the United States to become the worlds‟ second-largest smartphone market
after China, with over 40 million units shipped with 23% yearly growth in the third
quarter of 2017. [ET Telcom, Canalys]
 Smartphone, Internet and Digitalization in India-An Exploratory Analysis 29

Table 2: Top Five Companies Smartphone Market Share Change in India

Company Market share-2016Q4 Market share-2017Q4 Market share-2018Q2

Samsung 25.1% 24.2% 23.9% (2nd )
Xiaomi 10.7% 26.8% 29.7% (1th)
Lenovo Group 9.9% 5.6% -
Oppo 8.6% 4.9% 7.6% (4th)
Vivo 7.6% 6.5% 12.6% (3rd)
Transsion - - 5% (5th)
Others 38.1% 32% 21.2%
Total 100% 100% 100%
Source: IDC (February 13, 2018. August 13, 2018)

5.3.2 Smartphone market share of top five companies in India-2018Q2

From Table 3, we observed that most of the smartphone market in India has been
occupied by the Xiaomi company. Its share is 29.9%. Market share of Samsung is now
23.9%. 12.5% of Vivo, 7.5% of Oppo, 5% of Transsion, and other company occupied
21.2% of the total Indian Smartphone market. Chinese brand performance remained
strong and contributed to more than half of the total smartphone shipment. Xiaomi,
Vivo, Oppo, TranssioniTel, Huawei, and OnePlus were the faster growing Smartphone
brand.

Table 3: Top Five Companies Smartphone Market Share in India, -2018Q2

(Shipments in millions)

Shipment Shipment Year-Over-Year Unit

Market Share Market Share
Company Volumes Volumes Change
(2017Q2) (2018Q2)
(2017Q2) (2018Q2) (2017Q2-2018Q2
Xiaomi 4.8 17.2% 10.0 29.9% 107.6%
Samsung 6.6 23.6% 8.0 23.9% 21.3%
Vivo 3.6 12.8% 4.2 12.5% 18.0%
OPPO 2.2 7.9% 2.5 7.5% 15.2%
Transsion 1.1 3.9% 1.7 5.0% 53.0%
Others 9.7 34.6% 7.1 21.2% -26.8%
Total 28.0 100% 33.5 100% 19.8%
Source: IDC, Quarterly Mobile Phone Tracker, August 13, 2018

5.4 Worldwide position of the smartphone market in India

From Table 4 and Figure 3, we observed that China is the first largest
smartphone market in the world. India became the second-largest smartphone market in
30 PRAGATI: Journal of Indian Economy, Volume 6, Issue 2, Jul-Dec 2019

the world leave behind the USA in 2016. The USA is now the third-largest smartphone
market in the world. India is a faster-growing smartphone market. Indians are still
beginning to get used to smartphone. The greatest reasons behind the increasing
penetration are the low-cost factors and with high-end features. For the cost coming
down, every person who goes out to purchase a mobile phone is tempted to buy
smartphone when he sees that he can get a better phone with more features for the same
price or even lesser.

Table 4: Smartphone User Rank of Top Five Countries (Millions)

2013 2014 2015 2016 2017 2018

China 436.1 519.7 574.2 624.7 672.1 704.1
USA 143.9 165.3 184.2 198.5 211.5 220
India 70 123.3 167.9 204.1 243.8 279.2
Japan 40.5 50.8 54.4 61.2 63.9 65.5
Russia 35.8 49 58.2 65.1 71.9 76.4

Figure 3: Top Five Countries’ Rank of Smartphone User

800

700

600
2013
500 2014
400 2015

300 2016

200 2017
2018
100

0
China USA India Japan Russia

Source: eMarketer (Top 25 Countries, Ranked by Smartphone Users, 2013-2018)

India already contributed almost 7.6% to the global smartphone market in 2015
and expected to reach 13.5% by 2019. Out of total handset sales of 30 crore units in
 Smartphone, Internet and Digitalization in India-An Exploratory Analysis 31

2015, smartphone contributes 11.40 crore units (38%). This contribution is expected to
increase above 50% by 2020. Smartphone industries expect to leverage on the rural
demand and support the government in realizing the Indian digital dream. India is the
second-largest smartphone market in the world by the end of Feb 2016 with 608.4
million urban subscribers and 443.5 million rural subscribers. (According to the report
of, Assocham-KPMG and IBEF)

5.5 Entertainment spending time in smartphone, TV, and print media in India
The smartphone is special consumer durables in which consumers engage a lot
of time. It is now the most interesting entertainment side of daily life. The comparison is
given bellow with the smartphone and other entertainment.

Figure 4: Entertainment Spending Time in Smartphone, TV, and Print Media in

India

Smartphone TV Print media

2 hours weekly
3 hours daily or 4 hours weekly
21 hours weekly

Source: IMRB & MMR

According to the report of Mobile Marketing Association (MMA) and Kantar

IMRB on Smartphone and Feature Phone Usage and Behaviour, 2016-17 in India
(Figure 4), smartphone2 users are spending more time on their phone than on any other
media like TV and print. An average user spends approximately 21 hours weekly
assessing the internet on their smartphone and it increased 55% from the year 2015.
Almost 50% of all time spent on smartphone for social media and messaging apps
account for all categories. Whereas, spending time on TV is only 4 hours weekly and
print media is only 2 hours weekly. Women in India are engaging more on smartphone
than men. Women spend almost double time on their smartphone compared to the man
on YouTube and game. Women also spend 80% more time on Facebook on their male
32 PRAGATI: Journal of Indian Economy, Volume 6, Issue 2, Jul-Dec 2019

counterparts. Another revealed in this report is the rise of online shopping category,
which now has 15% more reach than entertainment.

6.0 Internet Users in India

A global computer network is providing a variety of information and

communication facilities, consisting of an interconnected network using a standardized
communication protocol. The internet simply moves data from one place to another, so
that we can chat, browse, and share. The use of the internet has increased gradually in
India.

6.1 Growth of internet users

According to the latest report from IAMAI, Title Mobile Internet in India-2016
(Table 5 and Figure 5), the country is estimated to have 371 million mobile users by June
2016; there were 389 million mobile internet users in India as in December 2016. India
is estimated to reach around 420 million mobile users by June 2017 (IAMAI and IMRB).

Figure 5: Growth of Internet User and Mobile Internet User in India

500 462

400 354 371

300
243 238
190
200
137 137
91
100 48

0
Jun-12 Jun-13 Jun-14 Jun-15 *Jun-16
Total Internet User Mobile Internet User

Source: IAMAI, Feb 2016, Figures in million users, *Estimated number

According to the Kantar IMRB ICUBE report 2018, the number of internet users
in India has registered an annual growth of 18% and is estimated at 566 million as of
December 2018.It projected double-digit growth and estimates that the number of
 Smartphone, Internet and Digitalization in India-An Exploratory Analysis 33

internet users will reach 627 million by the end of 2019. Ninety-seven percent of users
use a mobile phone as one of the devices to access the internet.

Table 5: Growth of Internet Users

2012 2013 2014 2015 2016

Total Total Change Total Change Total Change Total Change
Total internet users 137 190 38.69% 243 27.89% 354 45.68% 462 30.51%
Mobile internet users 48 91 89.58% 137 50.55% 238 73.72% 371 55.885
Source: IAMAI, Feb 2016, Figures in million users, (The change is based on the previous year)

6.2 Mobile internet users in rural and urban India

Table 6: Growth of Mobile Internet User in Rural and Urban India

2012 2013 2014 2015 2016

Total Total Change Total Change Total Change Total Change
Rural 4 21 425% 36 71.43% 68 88.89% 109 60.29%
Urban 44 70 59.10% 101 44.29% 171 69.31% 262 53.22%
Source: IAMAI and IMRB, (Total is million users and change based on the previous year)

Figure 6: Mobile Internet User in Rural and Urban India (Figure in millions)

262
Rural

171

101 109
70 68
44 36
21
4

Jun-12 Jun-13 Jun-14 Jun-15(E) Jun-16(E)

Source: Neeraj (2016) (IAMAI and IMRB Feb-2016, DAZEINFO/IDEA)
34 PRAGATI: Journal of Indian Economy, Volume 6, Issue 2, Jul-Dec 2019

According to Internet and Mobile Association of India (IAMAI) and Indian

Market Research Bureau (IMRB), (Table 6 and Figure 6), rural India was 4 million
mobile internet users and urban India it was 44 million. It changed to 21 million users
(425%) in the rural area and 70 million users (59.10%) in urban India in 2013. In the
year 2016, 109 million mobile internet users were in the rural area and 262 million users
in urban areas. Mobile internet users are increasing continually in rural and urban India
but rural India is growing at a much higher rate than urban India.
According to the Kantar IMRB ICUBE report 2018, of the total user base, 87%
or 493 million Indians are defined as regular users, having accessed internet in the last
30 days. Nearly 293 million active internet users reside in urban India, while there are
200 million active users in rural India.

6.3 Share of rural internet user and urban internet user

From Figure 7, we observed that the share of internet user in 2013 was 33% in
rural India whereas 67% in Urban India of the total internet user. This figure will have
dramatically changed in 2020. It will have changed by 50% in rural India and urban
India will become 50% of the total internet user. This growth rate of internet use in rural
India is based on the low-cost handset of smartphone, lower data package of Reliance
JIO & other data companies, Indian government digitalization and make in India
program.

Figure 7: Share of Rural Internet User and Urban Internet User

Rural Urban

2020 Rural-50% Urban-50%

2013 Rural-33% Urban-67%

Source: EY-2013 (Rajkumar et al. 2016)

6.4 Device use for internet: Rural and urban India

According to the report of IAMAI & KANTAR IMRB (Figure 8), 92% of the
rural internet users use their mobile phone. Only 7% used Desktop & Laptop, and 1%
used by tablet for their internet surfing. Whereas in urban India, 77% of the internet user
use their mobile phone, 17% used by desktop & laptop and only 6% by tablet. It is clear
 Smartphone, Internet and Digitalization in India-An Exploratory Analysis 35

that a large number of rural internet users are used to the mobile phone as it a personal
device that pocket size and transferable. Telecom Regulatory Authority of India
(TRAI) wants the government to consider free data suggestion to bridge rural
India‟s digital divide.

Figure 8: Device Use for Internet: Rural and Urban India

Mobile Desktop/Laptop Tablet

120% 1% 6%
7%
100% 17%
80%
60% 92%
77%
40%
20%
0%
Rural Urban
Source: IAMAI & KANTAR IMRB (2016), (Internet in India – 2016)

6.5 Internet user demographic profile

According to IMRB I- Cube report 2016 (Figure 9), the share of daily internet
user was 75% of male and 25% from the female in rural India. However, 60% of the
urban internet users are coming from the male and 40% from the female. From report
2017, we observed that female internet users have been increasing. The percentage of
internet users of the male in rural areas is greater than the urban areas. The percentage of
the female internet user in the urban areas is more than the rural areas.

6.6 Increased internet speed

A major percent of a wireless internet user is 2G. Adoption of 4G is gradually
increasing Abbas and Sing (2015). 4G is expected to contribute around 58% of the
mobile data tariff in India by 2020 (Figure 10). The Indian government initiative of
„Digital India‟ is also expected to be instrumental in driving the demand for 4G. Reliance
Jio has invested for allocation of the 4G spectrum where their network would encompass
6 00,000 villages in India.
36 PRAGATI: Journal of Indian Economy, Volume 6, Issue 2, Jul-Dec 2019

Figure 9: Internet User Demographic Profile

Gender ratio of daily internet user

Female-25%
Female-40% Female-36% Female-41%

Male-75%
Male-60% Male-64% Male-59%

Rural-2016 Urban-2016 Rural-2017 Urban-2017

Source: IAMAI - Internet in India-2016 and IAMAI -Internet in India 2017)

Figure 10: Increase in Internet Speed

4 Million 4.2%

58.4%
346 Million

2015 2018 2015 2020

4G Growth and market share 4G Mobile data tariff in India

Source: Balsara (2017) [Digital Opportunity -2017, EY Analysis, (CISCO Mobile VNI)]

From Figure 10, we observed that, 4G market in India has grown from 4 million
to 346 million from the year 2015 to 2018. After 2G, 3G, 4G, the Indian government
wants to get an early adoption of 5G (Fifth Generation), which is expected to
commercially roll out by 2020. 5G is expected to offer not only more speed for the end-
user and also have the capacity to connected the billions of devices like some driverless
car and households appliance which will connect to the internet in the near future
(GSMA (2018).
 Smartphone, Internet and Digitalization in India-An Exploratory Analysis 37

7.0 Digitization in India

Digitization in India is a process of converting information into a digital format

by the computer and other suitable electronic devices. All types of information such as
text, images, voices, sound, etc. are translated into a binary code. For that, all
information can be processed, stored, and transmitted through digital circuits, equipment,
and network. For the digitization in India, the organization leads towards a paperless
office and data will be available on-demand to the citizens (Dua, 2017). The vision of
„Digital India‟ program is inclusive growth in areas of electronic services, products,
manufacturing, and job opportunities. It is centered on three key areas, which is digital
infrastructure as a utility to every citizen, governance, & services on demand, and digital
empowerment of citizens (Mahindrakar 2017).

7.1 Changing digital profile in India

From Figure 11, it is observed that the Indian consumer has been increasing its
digital profile. In June 2014, total Smartphone users in India were 22 crores and it
increased to 40 crores in the year in May 2017. The internet user was 24.3 crores in June
2014 and it increased to 50 crores in May 2017. Aadhar registration has increased from
63 crores in June 2014 to 114 crores in May 2017.

Figure 11: Changing Digital Profile in India (2017)

June-'14(in crore) May-'17 (In Crore)

114 Crore
108 Crore

90 Crore

63 Crore
50 Crore
40 Crore

22 Crore 24.3 Crore

Smartphone users Mobile Phone users Internet users Aadhar Register users
Source: Digital India, Ministry of Electronics and Information Technology, GOI, August 24, 2017
38 PRAGATI: Journal of Indian Economy, Volume 6, Issue 2, Jul-Dec 2019

7.2 Growth of digital transaction

From Table 7, we observed that the number of digital payments is increasing
after the demonetization by the Indian government on 8 November 2016. This is the
fastest growing through UPI/BHIM. Thereafter, digital payment is growing through
Aadhaar Enabled Payment System, Debit Cards, Mobile Wallets, and immediate
payment system (IMPS).

Table 7: Growth of Digital Payment per Day after Demonetization

Digital payments mode 8 November 2016 17 May 2017 Growth

Mobile wallets 22 Lakhs 44.3 Lakhs 104%
UPI/ BHIM 3721 3.31 Lakhs 8803%
Debit Card (RuPay) 3.9 Lakhs 14.26 Lakhs 270%
Immediate Payment system (IMPS) 13.94 Lakhs 21.12 Lakhs 52%
Aadhaar Enable Payments System(AEPS) 32243 1.58 Lakhs 390%
Source: Digital India, (Ministry of Electronics and Information Technology, GOI, August 24, 2017)

E-governance transaction is increasing rapidly in India. From Figure 12, we

observed that in 2013, it increased to 66.25 lakh per day. In 2014, it increased to 96.9
lakh per day. It increased to 185 lakh in 2015. It increased to 300 lakh and 460 lakh in
the year 2016 and 2017 respectively. Last one year it increased by almost 53.33%.

Figure 12: E-Governance Transaction Growth per Day

460 Lakh
500

400 300 Lakh

300 185 Lakh

200 96.9 Lakh
66.25Lakh
100

0
2013 2014 2015 2016 2017
Source: Digital India-2017
 Smartphone, Internet and Digitalization in India-An Exploratory Analysis 39

7.3 Area of digitalization

The major areas associated with digitalization are mobile banking, unique digital
identity, high-speed internet, electronic financial transitions, ease doing business (Gupta
2016) digital literacy, available services through the online and mobile platform, digital
resource, without physical submission of the document, etc.

7.4 Opportunity of digitalization

The Opportunities available for digitalization are as follows
 Better advice on health service- Indian people can be helped better advice on the
health service through the internet connection. People can analyse health options
available.
 People can get chance for online education. It will help to improve the literacy rate.
 It will increase the effectiveness and transparency. Many Indian government
schemes can be implemented online (Shamim, 2016).
 It can help small business. The businessperson can use online tools to expand their
business effectively.
 Digitization can help improve lifestyle.
 It can connect to social media. People can connect all over the world with various
communities.
 Digital participation of the people.

8.0 Findings

 The smartphone market in India has been growing rapidly. The main reason for the
rising of smartphone is the affordable handset and data surfing in semi-urban and
rural India, especially with the launch of Reliance Jio.
 Digital India vision, make in India and advance technology is the most important
efforts of this penetration.
 People are now engaging more time on smartphone rather than entertainment like
TV, print media, etc. [IMRB &MMR]
 Large screen smartphone and increasing internet connectivity is translated into
financial transactions and related digital activities.

9.0 Conclusion

The smartphone market in India has been increasing at a fast pace. India is
currently the second-largest smartphone market in the world after China. India is
40 PRAGATI: Journal of Indian Economy, Volume 6, Issue 2, Jul-Dec 2019

continuing to have a long way to go as the smartphone penetration of the total population
is 27.7% (newzoo, 2018). That is why the reasons that India continues to attract the latest
smartphone brand every quarter. The causes for such acceleration are the availability of
low-cost smartphone, huge online discount, data plan, and for most popular latest use
apps like Email, WhatsApp, Facebook, Twitter, LinkedIn, and other social networking
apps, latest banking, and payment apps. Make in India is attractive for this mobile
industry. The manufacturing cost in China is far less than in India. Therefore lower &
middle-class people are able to purchases more Shweta (2015). The market share of
Chinese brands in the Indian smartphone market reached a record 66% during Q1 2019
(Jain 2019). The youth population in India is a lot more. They are consuming much data
in digital format through smartphone. The cashless transaction is increasing due to more
penetration of smartphone and mobile data. Today, with the change in lifestyle and
digital platform, mobile phone and related service are rising on the wings of the wind.

Endnotes

1. “Mobile is both a channel to deliver the right message at exactly the right time and a right
manifestation of post-digital thinking. It is more than just an interface-it‟s a digital service
that offers activation in the physical world, offering intangible incentives in exchange for
digital data” - Tracey Follows, Head of planning, VCCP.
2. “Mobile gives us a lot of segmentation opportunities that don‟t exist in any other channel
today”- Stacy Fassberg, vp, Marketing Celltick.

References

Abbas, S., & Sing, A. K. (2015). Mobile media penetration: Growing trends in four
centrally backward districts of Uttar Pradesh. Amity Journal of Media &Communication
Studies, 5(2), 66-74.

Agarwal, S., & Bhagoliwal, P. (2016). Managing technology and innovation in mobile
phone handset industry: A literature review. The International Journal of Business &
Management, 4(5), 505-510.

Akhtar, (2015, January 2nd -3rd). Make in India and Mobile phone Industry: Nuts and
Bolts of the policy. Paper presented at National Conference on Sustainable
Manufacturing, DMS, MNIT Jaipur, pp-245-256, Retrieved from
https://www.researchget.net/.../270507812_MAKE_IN_INDIA-MOBILE_PH...
 Smartphone, Internet and Digitalization in India-An Exploratory Analysis 41

Balsara, F. T., Pherwani, A., & Anand, R. (2017). Digital opportunity: Indian media and
Entertainment. Retrieved from https://www.slideshare.net/TheHWD/digital-opportunity-
indian-media-entertainment-2017?qid=e8ea9be7-b462-45d1-aac9-efb5712f6cbf&v=&b
=&from_search=1

Contreras, J. L., & Lakshane, R. (2017). Patents and Mobile Device in India: An
Empirical Survey. GSMA (2015).The Mobile Economy: India 2015.Walbrook, London:
GSMA Intelligence, Retrieved from www.gsmaintelligence.com.

Dua, S. (2017-March). Digital India: Opportunities and Challenges.2-Day international

conference on recent innovations in Engineering, Science, Humanistic, and
Managements. DevSamaj College for Women, Ferozepur, Punjab, India.

Goenka, B. (May-2019). India to have 859 million Smartphone users in 2022,

ASSOCHAM-PwC. ASSOCHAM BULLETIN, 44(5), 33.

GSMA (2018). The Mobile Economy: India 2018. London: GSMA Intelligence,
Retrieved from www.gsmaintelligence.com.

Gupta, P. (2016). Digital classifieds: in India 2020. India: KPMG. Retrieved from
https://assets.kpmg/content/dam/kpmg/in/pdf/2016/09/Digital-Classifieds-India-2020.pdf

Heuveldop, N. (2017). Ericsson mobile report - June 2017 with India appendix.
Retrieved from https://www.ericsson.com/.../mobility-report/.../ericsson-mobility-report-
june-2017-rin.

IAMAI & KANTAR IMRB (2016). Internet in India-2016. Bangalore: Internet, and
mobile association of India and Indian market research bureau. Retrieved from
https://cms.iamai.in/Content/ResearchPapers/2b08cce4-e571-4cfe-9f8b-
86435a12ed17.pdf.

IDC (2019, February 11). Indian smartphone market exits 2018 with highest even
shipment of 142.3 million: IDC India report. Retrieved from
https://www.idc.com/getdoc.jsp?containerId=prAP44856419
42 PRAGATI: Journal of Indian Economy, Volume 6, Issue 2, Jul-Dec 2019

Ipsos Business Consulting (n.d.) India‟s Mobile Phone Market. Ipsos Business
Consulting. Retrieved from www.ipsosconsulting.com/pdf/Research-Note-India-Mobile-
Phone-Market.pdf.

Jain, A. (2019). Chinese brands capture a record 66% of the Indian smartphone market in
Q1 2019. Counterpoint, Retrieved from https://www.counterpointresearch.com/chinese-
brands-capture-record-66-indian-smartphone-market-q1-2019/

Jain, A. (2019). India smartphone market reached 37mm shipment. Counterpoint, A

second quarter record. Retrieved from https://www.counterpointresearch.com/india-
smartphone-market-recorded-highest-ever-q2-shipments-2019/

Kantar IMRB ICUBE (2018). Digital adoption & usage trends. 21st edition ICUBETM,
Retrieved from https://imrbint.com/images/common/ICUBE%E2%84%A2_2019_
Highlights.pdf.

Mahindrakar, V. (2017). Digital India: A program to transform India into a digital

empowered society and knowledge economy. International Journal of Advanced
Engineering Research and Technology, 5(9), 705-708.

Neeraj, M. (2016). Mobile internet users in India 2016: 371 Mn by June, 76% growth in
2015. Retrieved from https://dazeinfo.com/2016/02/08/mobile-internet-users-in-india-
2016-smartphone-adoption-2015/

Newzoo, (2018). Top 50 Countries Smartphone users and penetration, September 2018.
Retrieved from https://newzoo.com/insights/rankings/top-countries-by-smartphone-
penetration-and-users/

Rajkumar, D., Sharmila, K., & Rebello, S. (2016). A study on mobile usage and data
penetration in India using predictive analytics. International Journal of Latest Trends in
Engineering and Technology Special Issue SACAIM 2016, 260-265. e-ISSN: 2275-
621X. Retrieved from http://www.ijltet.org/journal/147910361444.pdf.

Saripalle, M., & Mukhopadhyay, J. P. (2016, March). Mobile phone penetration, income
inequality, and economic growth: A panel data study of Indian states. One-day
international seminar (18-03-16) on creation and diffusion of technology, organized by
 Smartphone, Internet and Digitalization in India-An Exploratory Analysis 43

Knowledge Forum (in partnership with Tata trust). Retrieved from

http://fgks.in/images/pdf/conf/2016/Madhuri.pdf.

Shamim. (2016). Digital India - scope, impact and challenges. International Journal of
Innovative Research in Advanced Engineering, 3(12), 90-93.

Shweta. (2015). The promotional strategy in competitive Smartphone market: a case

study of Indian and Chinese mobile handsets companies. International Journal of
Research in Commerce &Management (IJRCM), 5(7), 66-69.

Watkins, J., Kitner, K. R. & Mehta, D. (2012). Mobile and smartphone use in urban and
rural India. Continuum: Journal of Media & Cultural Studies, 26(5), 685–697.