Spending on apps will grow at a compound annual growth rate (CAGR) of 32% during 2022-2030
The app economy has a significantly larger multiplier in the form of smartphone users and economic growth, compared to overall GDP
The top three app segments in India include social media apps (73%), messaging apps (63%), and shopping apps (58%)
As smartphone penetration deepens into rural India, the amount of money spent on apps in India is projected to reach around $800 Bn by 2030, growing at a compound annual growth rate (CAGR) of 32% during 2022-2030.
Given that, the Indian economy is expected to be around $6,600 Bn by 2030, the app spending is likely to contribute around 12% of the GDP, according to a report by Broadband India Forum (BIF).
The growth in app economy is around 32%, more than four times the GDP growth. This is because the app economy has a significantly larger multiplier in the form of smartphone users and economic growth, as per the report.
“Given this multiplier effect, the government’s role would be to help lower the cost of smartphones through supporting indigenous manufacturing, reviewing tax on imports and accelerating chip manufacturing (medium-term). The PLI is an example of such a support that has facilitated smartphone production in India,” the report added further.
The app economy refers to the range of economic activities surrounding mobile applications including the development and sale of apps, in-app purchases, subscriptions, advertisements, promotions and PR for free apps, the hardware devices and operating system software on which apps are designed to run.
The BIF report claims that the contribution of the app economy to India’s GDP is higher than that for the EU and the UK for 2021. The relatively higher value of payments made via mobile devices in India is likely to one of the reasons
Nearly 85% of the total digital transactions in India, which include credit and debit cards, internet banking are made through mobile payment apps.
The top three segments for mobile installs in India include social media apps(73%), messaging apps (63%), and shopping apps (58%).
One area where India needs to catch up is the app development economy. Currently, app development revenue in India stands at $195 Mn, compared to $602 Mn in the US, $513 Mn in China.
“India’s aspiration to become a $5 Tn economy in the next few years is premised on a $1 Tn contribution from the digital economy,” BIF chairperson Aruna Sundararajan said.
It is pertinent to note that India’s digital economy grew 2.4 times faster than the overall economy of the country during the 2014-19 period, the Reserve Bank of India (RBI) said last year. In absolute terms, the size of the digital economy grew to $222.5 Bn in 2019 from $107.7 Bn in 2014, the RBI said.
India is likely to have 900 Mn active internet users by 2025, up from 622 Mn in 2020. This would be a 45% increase in the next five years, according to a report from IAMAI.
