India`s Internet economy to reach $250 billion by 2020: Report

New Delhi: India's Internet economy is set to touch $ 250 billion, driven by strong addition in online users and explosive growth in data consumption, a BCG-TiE report today said.

India's Internet economy is expected to grow from $ 100-130 billion (about 5 percent of GDP) to $ 215-265 billion (7.5 percent by 2020 with e-commerce and financial services projected to lead this growth, the report titled 'The $ 250 Billion Digital Volcano: Dormant No More' said.

E-commerce and financial services is expected to comprise $ 40-50 billion, e-commerce products $ 45-50 billion and digital media and advertising at $ 5-8 billion, the report added.

A major chunk of this is expected to come from private and government infrastructure spending ($ 50-60 billion), followed by that on connectivity ($ 45-55 billion) and devices ($ 30-40 billion).

With about 391 million users, India has already become the second highest country in terms of mobile Internet users. This is expected to grow rapidly to about 650 million mobile Internet users by 2020.

At the same time, data consumption by 2020 could potentially increase 10-14 times.

The average data consumption is projected to reach 7-10 GB per user per month by 2020.

"It is essential to understand the three forces that are now synergising to unlock Internet consumption in India - 4G enabled devices, reliable high speed data and proliferation of digital content," Nimisha Jain, a BCG partner and report co-author said.

Increased high speed Internet adoption, the report said, is expected to expand time spent online by 2020 to almost 3-4 times. Moreover, the amount of video consumed online is on the rise especially driven by online media and entertainment.