Internet giant Google expects India's Internet growth to be driven by mobile users, predicting that they will form the majority of new Internet users in the country as low-priced smartphones become available.

India now has 100 million Internet users, less than a tenth of the country's population of 1.2 billion, but still the third largest user base behind China and the United States. The number is expected to grow to 300 million in the next three years.

The next 200 million new users will largely be mobile-first users and out of those, 100 million will be mobile-only users, Rajan Anandan, who heads Google's operations in India, told Reuters in an interview.

That mobile Internet boom will be driven by increased usage of smartphones. Now, only 10 million of India's 870 million mobile customers use a smartphone, a figure Google, maker of the Android mobile operating system, hopes grows significantly.

We'd like to see India become a 100-150 million smartphone market, and to do that, we've got to have $100 smartphones, Anandan said.

Smartphones accounted for a little over 5 percent of Indian mobile handset sales for the three months ended June, according to latest data available from International Data Corporation, but the segment grew 68 percent from a year earlier.

Android smartphone prices have fallen sharply in the past one year with local Indian handset makers launching cheaper phones. The cheapest Android phone costs 4,280 rupees ($87) at online retailer Flipkart, while LG Electronics and Samsung have Android models that cost less than 7,000 rupees ($142).

Apple's iPhone 3GS costs 20,900 rupees ($424) at top mobile phone carrier Bharti Airtel.

High-speed third-generation mobile services, meanwhile, have been slow to take off in India since there were rolled out earlier this year, with an estimated 10 to 15 million users.

Anandan, who worked with Microsoft and Dell before taking over Google's India operations, said pricing for 3G bandwidth should be lower in order for it to take off.

Earlier on Wednesday, Google launched an initiative to offer free websites to small and medium-sized businesses in India, something it has done in 18 other countries. Its aim is to bring half a million such businesses online in the next three years.

The country is home to an estimated 8 million small and medium businesses, of which about 400,000 have a website and 100,000 have active online presence, Google said in a presentation. ($1=$49.18 rupees)

(Additional reporting by Devidutta Tripathy in NEW DELHI; Editing by Tony Munroe, Aradhana Aravindan)

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