Why only 3% of India has home internet access

Internet companies want to see more of this in places like Bangalore.
Internet companies want to see more of this in places like Bangalore.
Image: AP Photo/Aijaz Rahi
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Google executive chairman Eric Schmidt doesn’t think much of India’s internet strategy, telling a television channel that the country ”is well behind in the web services model that the rest of the world is adopting.”

There’s no doubt that Schmidt, traveling in Asia this week, is talking his book: Every new Indian on the internet is a new customer for Google, and Asian expansion is obviously on the company’s agenda.

But it’s still notable that only 150 million Indians have internet access in a country of 1.2 billion. That’s significantly lower than other emerging markets. Consider this Gallup survey from January, which polled citizens around the globe about whether they have home internet access: While only 3% of Indians answered “yes,” in China, 34% confirmed home internet access, with 51% penetration in Russia and 40% in Brazil.

For comparison, 80% of adults in the US said they had internet access, and 73% and 77% in Japan and Germany, respectively. The world leader in home internet access, per the survey? Sweden, with a score of 93%.

Differences in national wealth per person explains a lot of the disparity between the emerging markets, but that doesn’t explain why poorer countries than India, like Pakistan and Zambia, have more internet access. Schmidt points the finger at complacency in India’s government.

The success of Indian IT outsourcing firms like Infosys and Wipro has lead to reduced investment in tech infrastructure, he says, particularly fiber optics for broadband. The country spends about 1% of its GDP on technology, compared to 2.5% around the world.

Schmidt also wants an “open internet” for India, where online censorship has become a source of tension in ethnically and religiously heterodox society. Companies worry about managing India’s broadly defined speech restrictions—there’s even a law criminalizing “causing annoyance and inconvenience online.” Schmidt argued that Indians will reap the benefits of a less-regulated online world through the expansion of entrepreneurs producing services like RedBus.

It’s not just censorship: Restrictions on foreign direct investment, payment rules, cronyism in the telecom industry all play a part in reducing internet access and the economic benefits that can come with it. You can see the effect of the government’s slow adaptation to modern telecommunications in where India’s promise has paid off: It’s biggest successes are abroad and in mobile and wireless internet.

Indian officials agreed with Schmidt about the importance of India’s internet market, they appear to remain committed to some kind of content-control. The government is starting to roll out more fiber optic network, and there’s certainly an appetite in the country for big, ambitious projects.