Why India matters to Silicon Valley

Hundreds of millions of Indians are buying their first smartphones. The country's rapid growth has caught the attention of tech companies around the globe.

India's Prime Minister Narendra Modi speaking at Facebook's offices in Menlo Park, California, in September 2015.

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India added 100 million new users to the Internet in 2015, taking the country to more than 400 million users -- more than there are residents of the US. But with another 800 million yet to be connected, the world's biggest tech companies are eager to be a part of India's consumer tech boom in the decade ahead.

Growth in the nation's tech markets is happening faster than ever -- it took a full decade for India to grow from 10 million Net users to 100 million, a milestone it crossed around the turn of the century. The recent meteoric growth won't be stopping anytime soon. Between Google last month beginning its mission to hook up train stations around India with free Wi-Fi and Facebook's controversial Free Basics initiative, which will give limited e-services to the poor at no cost, expect the numbers to only accelerate.

While there are many factors in India's technological emergence, smartphones -- cheap ones, in particular -- are chief among them. In 2015, smartphone sales in India eclipsed those in the US for the first time ever, according to Counterpoint Research. China remains the world's largest phone market, but it's nearing saturation point, with growth stalling in 2015 for the first time. The US is a similarly tough nut to crack, with 79 percent of people already owning smartphones, according to ComScore.

China and the US "are visibly slowing down owing to saturation levels," IDC Research Manager Kiran Kumar said, "and in terms of annual growth rate, which in 2015 exceeded 30 percent levels for India, the country would be on top in relative comparison."

Only 18 to 20 percent of Indians own smartphones, according to Kumar, so the real fun is just getting started.

This increased smartphone use is a major reason why the country's Internet user base is rising so rapidly. With over 400 million Indian citizens now online, the Internet and Mobile Association of India estimates, the country is second only to China. Most users have completely skipped wired connections and instead gained their first access to the Net via wireless. By 2017, more than 314 million of the country's citizens will be online thanks to smartphones, the IMAI forecasts.

Western players are increasing their efforts in the region and some are already seeing results. Instagram doubled its user count in India over the course of a year, while four times as many hopeful romantics used Tinder in 2015 as the year before. Silicon Valley is also investing in Indian-built services, such as Hike Messenger, which offeres support for eight different Indian languages.

The Indian government's "Make in India" initiative, which gives foreign and domestic firms tax benefits for manufacturing products inside India, has seen Samsung, Apple and Chinese brands such as Xiaomi, ZTE and most recently Coolpad setting up manufacturing plants to serve the growing Indian market.

China has been the world's hottest market for some time, but India is poised to step into the spotlight in the decade to come.

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