According to industry body ASSOCHAM, there are currently 343m internet users in India and, although the number is expected to grow rapidly in the next few years, internet penetration still remains at about half that of China (27% versus 50.3%).
ASSOCHAM's joint study with Deloitte, the professional services firm, also revealed that public Wi-Fi penetration remains low in India.
Globally, there is one Wi-Fi hotspot for every 150 people, but for India to reach that level would require more than 8m hotspots, of which only about 31,000 are currently available.
That is despite India having around 240m smartphone subscribers in a total mobile phone subscription market of more than 1bn, and the number of smartphone users is expected to grow to 520m by 2020.
Several barriers are holding the country back from fully realising the government's Digital India initiative, the report warned, and these include problems with extending internet penetration to rural India.
More than 55,000 villages currently remain deprived of mobile connectivity, the report said, and the commercial viability of providing such a service is a significant issue for providers.
"Effective collaboration with the private sector is critical to the development of the digital infrastructure," the report stated. "Innovative engagement models that ensure commercial viability needs to be developed jointly through consultation with industry bodies," it added.
ASSOCHAM and Deloitte recommended that private sector internet providers should be incentivised to provide last mile connectivity. Satellite communication solutions also could be used to speed up broadband access in rural and remote areas.
"For the success of the Digital India program, capacity building is crucial," the report said. "In addition to infrastructure development, digital literacy, skill building and higher adoption of digital solutions is key to program success."
Data sourced from ASSOCHAM Deloitte; additional content by Warc staff