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Digital Technologies will contribute 20% of US$5 trillion economy target by 2025, predicts EY

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The Indian government has set a target of making India a US$5 trillion economy by 2025, from US$2.7 trillion in 2018-19 at a growth rate of close to 7%. Digital technologies across sectors such as retail, financial services, healthcare, energy, manufacturing and infrastructure will be fuelling this growth resulting in employment generation, increased local and regional entrepreneurship and facilitate equitable socio-economic growth.

By 2025, digital technologies are expected to generate US$1 trillion in economic value. Digital economy has the potential to sustain 60-65 million employment opportunities for women, differently abled people, skilled and semi-skilled workers across digitally enabled businesses in urban, semi-urban, and rural areas. This transformation is expected to create a thriving market for digital services, content, solutions, platforms and applications. Market enablers such as availability of increased disposable income, cheaper smart phones, declining data tariffs, and increased digital literacy are helping achieve inclusive growth by making products and services more accessible – fuelling the digital economy.

Prashant Singhal, Emerging Markets TMT Leader, EY, said, “India is at an inflection point – digital has changed the way people communicate, socialize, create, sell, shop and work. ‘What comes next’ will be determined by the continued focus on fostering innovation, developing unique service offerings and enabling the digital infrastructure in the country which will help us achieve or even exceed the US$1 trillion target. India is poised to be a game-changer in the world digital economy by empowering its citizens and revolutionizing businesses.”

Over the last five years, India has achieved significant milestones in its digital journey across digital payments, digital infrastructure, sharing economy, start-up ecosystems and electronics manufacturing under the Digital India and Make in India initiatives. In the last four years, 268 mobile and mobile component manufacturing units have been set-up, generating 670,000 direct and indirect jobs under the electronic manufacturing initiative. Domestic electronics manufacturing could generate economic value of US$100 billion to US$130 billion by 2025.

Access to internet is the primary enabler of digital economy, resulting in the re-invention of business models across industries and service delivery. Currently, internet user base in India is expected to reach 627 million by the end of 2019 – second only to China, which is expected to reach about 850 million by 2025. However, the internet penetration is at only 36% – indicating significant growth opportunities. Rural internet users are expected to increase by 2.5 times, in comparison to the urban internet users – providing a huge impetus for the next big wave of growth.

The Indian e-commerce and consumer internet sectors are expected to reach US$200 billion by 2027[i] and is a significant avenue to provide employment and build entrepreneurship in the country. In 2018, the sector raised over US$7 billion in PE/VC capital (including venture debt) across approximately 200 deals, and seven companies reached the coveted unicorn status[ii]. 2019 has already seen five companies achieve the unicorn status as the sector enjoys investor and consumer confidence. The e-commerce and consumer internet companies are bringing unique solutions through innovation and technology across sectors such as mobility, healthcare, logistics, gaming and education which have combined raised US$1 billion in investment capital[iii]. By scaling 80% of India’s e-commerce supply chain to digital value chain could generate an additional economic value of US$5 billion to US$10 billion in 2025.


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