Indian Small Biz Should Exploit the Net

Nearly 50% still use dial-up, and many consider the Internet a communications tool rather than a way to drive growth

Smaller businesses in India are not yet realizing the potential of the Internet as a growth and transformation tool for the business, according to AMI-Partners, an analyst specializing in small and midsize business (SMB) research.

"The Internet is still perceived as an enabler in India, rather than a driver of business growth and opportunities," Avimanyu Datta, an analyst with AMI-Partners who is based in Kolkata, India, said in a media statement. "Its adoption is more reactive than proactive. It's still considered an economical channel for communication rather than a strategic growth driver to enhance competitive position."

Although nearly all midsize businesses and over 50 percent of small ones have access to the Internet, only a low proportion of small companies in India leverage on Web sites and e-commerce, noted Datta. In addition, close to 50 percent of small businesses with Internet access are using dial-up, leaving the broadband Internet market largely untapped.

SMBs in the country, however, are expected to beef up their Internet strategies and spending by the end of this year, according to new research from AMI-Partners. The study shows that Indian SMBs are expected to invest up to US$1.2 billion on Internet infrastructure and applications, about 41 percent more than last year.

Among small businesses, the biggest spenders on Internet technologies are retailers, while manufacturers are the heavy spenders among medium-sized businesses.

The majority, or nearly US$830 million, of the spending will be pumped into Internet access, said Dutta. This is a 24 percent increase over 2005.

According to AMI-Partners, the Indian government's broadband plans for the country are spurring the adoption of Internet technologies. Its Broadband Policy 2004 aims to grow the number of Internet subscribers to 40 million by 2010, of which 20 million are expected to be broadband subscribers.

To accelerate the growth of broadband services in India, the government has implemented initiatives such as a five-year tax rebate for companies providing Internet services, broadband networks or telecom services.

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