According to the new report by The Boston Consulting Group’s Connected World Series, the Indian internet economy is projected to rise to Rs 10.8 lakh crore by 2016. The report also said stated that Indian internet economy contributed Rs 3.2 lakh crore to the overall economy in 2010, representing 4.1 per cent of GDP.

Meanwhile, in the next four years, the total size of the G-20 internet economy will be USD 4.2 lakh crore, up from USD 2.3 lakh crore in 2010. India's internet economy growth rate of 23 per cent places it as the second fastest across the G-20 and ahead of many other developing nations in the G-20, which are growing at an average of 17.8 per cent.

The report covered 9,710 internet users in 13 countries and used the loss aversion approach to measure the value of the Internet to consumers. The report further said had it internet been a sector, it would have been the eighth largest sector in India, larger than mining and utilities. 36 per cent of Indian online consumers said they would forgo showering for a year in order to keep Internet access, around 64 per cent said they would forgo chocolate; 63 per cent coffee; and 70 per cent would give up alcohol.

In India Internet economy is driven especially by exports of IT services: net exports make up 59 per cent of the Indian Internet economy, while consumption is only 20 per cent.

"China and India stand out for their enormous Internet related exports- China in goods, India in services - which propel their Internet-economy rankings toward the top of the chart," BCG Partner Arvind Subramanian said.

"Around the world SMEs which embrace the Internet are growing faster and adding more jobs than those that don't. By encouraging businesses to adopt the Internet, countries can improve their competitiveness and growth prospects," said David Dean, BCG Senior Partner and co-author of the report.