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India’s internet economy is set to attract massive investments as several players such as food-delivery startup Zomato, courier service provider Delhivery, Walmart-owned Flipkart, and e-tailer Nykaa are expected to enter the public market in 2021.

“More than $60 billion has been invested in India’s internet startups in the past five years, with around $12 billion in 2020 alone. Many of these leaders, which operate businesses ranging from food delivery and e-commerce to online insurance, are now on the cusp of listing," HSBC Global Research said in a February 2021 report.

E-commerce is expected to lead to growth in the internet economy, however, entry of Ambani-owned Jio platforms can stiffen competition
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E-commerce is expected to lead to growth in the internet economy, however, entry of Ambani-owned Jio platforms can stiffen competition

In a January report, Citi Research said that it expects public market listings to accelerate in 2021, aided by improving profitability and scale in various verticals.

Internet sub-segments such as e-commerce and edtech, combined with penetration of wireless subscribers and improved service quality by telecom operators are likely to drive growth, analysts said. Analysts at HSBC estimate that the total value of the country’s internet economy could cross $180 billion by 2025, while analysts at Citi Research estimate the market to be worth $639 billion by 2030.

E-commerce is expected to lead the growth in the internet economy. Analysts said while Amazon.com Inc and Flipkart dominate the space with 80% market share, India’s e-commerce is still evolving. The entry of Mukesh Ambani-owned Jio Platforms Ltd, with its online retail business, could stiffen competition and threaten existing players.

Jio Platforms houses Reliance Industries Ltd’s (RIL) telecom business Jio and a slew of other digital services such as online grocery delivery, healthcare, payments, gaming, cloud. Citi Research said that it expects public market listings to accelerate in 2021, aided by improving profitability and scale in various verticals, over-the-top (OTT) content, music, video conferencing, among others.

Mint had on 18 January reported that Reliance Retail Ventures Ltd plans to embed its e-commerce app JioMart into WhatsApp within six months, allowing the 400 million users of India’s most popular messaging service to order products without having to leave the app.

“Reliance Jio is set to emerge as a significant competitive threat, along with multiple vertical e-commerce players and hundreds of brands that are now delivering direct to consumers. We believe Reliance Jio, a relative newcomer, will become a stronger competitor, because of its offline retail presence (over 12,000 stores across 7,000 cities)," HSBC said. With 410.8 million customers under its telecom business, Jio Platforms can capture market share by providing other internet services to these subscribers. According to Citi Research, WhatsApp may launch its mini-programme framework, or lite version, with Jio’s suite of apps including for e-commerce, entertainment and gaming, under the Jio Platforms-Facebook Inc deal signed in April 2020 for 43,574 crore.

Given that e-commerce penetration in India is only about 10% and only 30% of internet users transact online, JioMart-WhatsApp integration could allow the online grocery delivery services provider to improve coverage in underpenetrated areas, Citi said.

Mini programmes are lightweight applications where users stay within the main app without being redirected outside for e-commerce transactions, booking lifestyle services, or playing online games. Mini apps are extremely popular in China. Affordable smartphones will also drive growth for India’s internet economy. Jio’s plan to launch an entry-level and low-cost smartphone in a partnership with Google LLC will give a fillip to the country’s 4G internet usage.

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