By Rajesh Goenka – CEO, Rashi Peripherals Limited
Technology consumption in India has seen a sharp rise in the last two decades. Earlier accessible to a section of the population, today consumer technology is easily available across the country. Factors such as the rising disposable income of Indian households, slashing prices of consumer tech in entry-level categories and transition towards digitisation are driving the growth of technology adoption in the cities beyond metros. Tier 3 and tier 4 cities are the emerging markets for ICT brands with a steady increase in technology consumption and demand for high-end gadgets. This trend is more evident post-COVID-19 pandemic where the demand for work from home (WFH) and Learn from Home (LFH) triggered massive demand for PCs, laptops, networking and storage products from small cities and towns. The government’s emphasis on digitisation, consistent improvement in infrastructure, rising digital literacy among citizens and seamless availability of the latest technology products are driving the growth of ICT hardware business in tier 3 and 4 cities in India. The ICT distribution sector is instrumental in driving this growth from introducing new brands and products in non-metro locations to ensuring an adequate supply of ICT products to serve the technology needs of tech-savvy consumers.
Demand for WFH and LFH solutions post-COVID-19 pandemic
The need to maintain social distancing led to remote working and distance learning and one-on-one interactions were replaced by virtual meetings. This led to high demand for ICT devices such as laptops, tablets, and smartphones across the country. With companies adopting a hybrid work culture, the demand for PCs, networking, storage and connectivity solutions has grown consistently and is expected to do so in the future as well. Laptop is no longer a device for work or education but has moreover become the medium for entertainment such as streaming, OTT content consumption etc. Today, it is very common to have personal laptops for every member in an Indian household. These trends are driving the growth of ICT consumption in the B and C-class cities. The steady shift towards Virtual classrooms has generated demand for digital displays, projectors, networking solutions such as Wi-Fi routers etc.
Affordable Internet connectivity and proliferation of smartphones
The proliferation of smartphones and the availability of affordable internet connectivity is driving the growth of the industry in small towns and cities. Smartphones have constraints when it comes to heavy online surfing and high-end gaming. Hence, there is a natural transition towards PCs and laptops. Also, unlike earlier, today B and C-class cities do not face acute power failure, therefore, people are willing to invest in computer hardware for convenience and better performance.
Similarly, the awareness of online gaming is rising in small cities and towns due to affordable internet connectivity and mobile gaming. We saw a surge in high-end gaming laptops and consoles from small cities and towns during the pandemic as online gaming was one of the major sources of entertainment among youngsters. The awareness of online gaming rising and Gaming enthusiasts are willing to pay premium prices for better performance, speed and aesthetics.
Rising disposable income of Indian households
According to Goldman Sachs, the per capita disposable income of Indian households grew 8% in FY24 and 13.3% in the previous year. The income graph of people in B and C-class cities has grown steadily. People have access money to spend on premium/class technology products giving room for brands to place their products in this market segment. The general awareness of digital technologies has increased. Consumers are willing to pay for premium products for better performance and security. The E-Commerce sector is on a steady rise as well which makes the availability of technology products easy.
Government’s push and rising start-up culture
The ICT landscape in Tier 3 and Tier 4 cities in India has seen impressive progress, with numerous factors like government support, private sector investments, etc. working in tandem. The user base is growing at a faster rate in rural areas, even though the penetration of the internet in urban locations is more than twice that of the rural population. Government initiatives like BharatNet and affordable internet plans have provided better access to tier 3 & tier 4 cities, encouraging a digital economy. Also, the growing start-up culture in non-metro locations driven by factors like government backing and good government regulations like simplified compliance streamlining procedures for taxation, legal requirements, credit guarantee schemes, etc. has led to increased demand for ICT products in these cities. Companies are setting up call centres and data centres in non-metro locations. These businesses need robust ICT infrastructure and hence, fuelling the growth of the ICT sector in tier 3 and 4 cities.
Role of ICT distribution
The ICT distribution ecosystem plays an instrumental role in boosting technology consumption in the tier 3 and tier 4 markets. National distributors through their extensive network of regional distributors, channel partners, stockist partners, LFRs and online marketplaces etc. ensure the availability of the latest technology products in small cities and towns. They also act as an extended arm of brands to spread awareness about the latest technologies through roadshows, product training to retailers/resellers/channel partners so that they can educate their end users on products suited to their requirements.
In summary, India’s Tier 3 and Tier 4 cities are emerging as strong drivers of the growing ICT industry. These factors which include better internet connections; government initiatives; increased start-up businesses; and transformed customer attitudes have led to an enabling environment for growth in the ICT industry within these areas.
