DELHI: Improved network infrastructure in small towns and rural areas has led to a rapid increase in the Indian web penetration rate, a new report has shown.

According to the report, from the Internet and Mobile Association of India (IAMAI) and IMRB, a tenth (121m) of the population will have gone online by the end of 2011, making India the world's third-largest online nation behind the US and China.

This is also a sharp increase from the 112 million online population recorded at the end of September. If present growth rates indicated by the IAMAI/IMRB report are maintained, India will have more web users than the US in two years time.

"We have achieved a critical mass [of web users] and this will usher in a new stage of growth for our economy," IAMAI president Subho Ray said.

The report found the networks had extended well beyond urban centres. It claimed there are more web users in small towns and cities with a population of 500,000 or less than there are in India's eight largest cities put together.

But just 29 million of the 121 million total were classified as living in rural areas.

In all, 97 million were classified as "active" users, meaning they used the web once a month or more.

Results of the report suggest that fixed-line infrastructure continues to improve in India, and that the government is on course to hit its target of having 175m domestic broadband users by 2017.

"The government and private players now understand that infrastructure is critical and they are trying to put the pieces together," Ray added.

Data sourced from Economic Times/CXO Today; additional content by Warc staff