India's millennials, about 28 per cent of the population, will drive the internet growth especially online transactions in the coming years, a top Morgan Stanley official has said.
"These young people are going to be a lot open to adopting technology and become conduit for improving tech penetration within the entire population as well," said Parag Gupta, the executive director who leads the technology, internet and media practice for Morgan Stanley India.
An average per capita income of the Indian millennials (a person reaching young adulthood around the year 2000), was USD 2,400, while those above 45 years earned about USD 2,150 in 2015.
"We believe this could propel internet penetration and online adoption/engagement in India," said a recent Morgan Stanley survey.
The millennial will lead the older in increasing the internet use, Gupta added.
"The younger generation will start transacting online a lot faster," he said, citing their higher earnings from a consumer survey.
"We expect India to be the fastest growing e-commerce market globally," Gupta said.
The avenue for online transaction growth is phenomenal, averaging 60 per cent based on compound aggregate growth rate during 2014 and 2020.
The growth for overall internet market is seen at 45 per cent compound annual growth rate (CAGR) during same period.
He sees daily increase in the number of internet users.
"We are seeing about 100 million smartphone shipped into India annually which are essentially going to first time internet users," he said.
"This means we are now adding 100 million new internet users every year," he said.
Internet penetration at the end of 2015 was around 33 per cent or 400 million internet users.
"We are expecting to see 790 million internet users by 2020," Gupta said.
He also sees increases in online shopping to about 320 million people in 2020 from the present 50 million.
These new spenders on internet would be the primary drivers of growth in the internet sector itself. The growth is led by higher volume from the increase in the number of online shoppers.
But individual spending will increase to USD 300 per year from current USD 240 per year by 2018, according to Gupta.