NEW DELHI (Reuters) - Google Inc said it will offer free websites to small and medium businesses in India in a move to boost Internet usage in Asia's third-largest economy and aims to get half a million of these businesses online in the next three years.

India is the world's second-biggest mobile phone market with about 870 million users, but Internet penetration is low. About 100 million, or less than a tenth of a country of 1.2 billion people, use Internet although that still makes it the world's third-biggest Internet user market.

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 on Wednesday.

The online commerce, or e-commerce, market in India is small now but few people doubt one day it will be a big business in the country. Google said in the presentation e-commerce in India has hit an "inflection point."

"We want to build an ecosystem...We are investing in the market," Nikesh Arora, Google's chief business officer, told reporters in the Indian capital, adding the country was not a big revenue market yet but a good user market.

Rajan Anandan, managing director of Google's Indian unit, said the Internet search giant was making "significant" investments in the free web hosting initiative but had no "near-term revenue expectations" from it.

Google and its partner web hosting firm HostGator will facilitate free web domain names and will maintain the websites for a year without charging any fee. At the end of the first year, users will have to pay a "nominal charge" if they wish to renew their domain name, Google said in a statement.

(Reporting by Devidutta Tripathy; Editing by Aradhana Aravindan)

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