Indian ecommerce market to grow to $325 billion; digital economy to reach $800 billion by 2030

The number of online shoppers in India is projected to increase with a CAGR of 22% to 88 million in rural India (Photo: Freepik)

The Indian e-commerce market is predicted to grow to a whopping $325 billion, and by the same year the country’s digital economy to reach an astounding $800 billion. With 881 million users, India has the second-largest Internet user base in the world, and by 2030, it is expected to rise to the third position in the online retail industry, according to Invest India.

With a growing digital economy and internet user base, India is poised to become a worldwide e-commerce powerhouse by 2030 and is expected to lead the way in online shopping with 500 million buyers. At present, the e-commerce market in India is valued at $70 billion, which accounts for around 7% of the nation’s overall retail market. The internet penetration has witnessed significant growth, with 52% of the Indian population, approximately 759 million people, accessing the internet in 2022.

One of the primary drivers is the increasing internet penetration, with around 87% of Indian households expected to have internet connections by 2025. However, the duration of internet access through mobiles has seen a 21% rise compared to 2019.

The number of online shoppers in India is projected to increase with a compound annual growth rate (CAGR) of 22% to 88 million in rural India and 15% to 263 million across urban India between 2019 and 2026. India’s affordability in data prices also plays a pivotal role, with one gigabyte of data costing approximately $0.17 (Rs 13.5), driving the majority of the population online.

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Further, the rise in smartphone users, projected to reach 1.18 billion by 2026, coupled with an increase in average data consumption per user, further propels the digital economy. Mobile data traffic has tripled from 2018 to 2023, showcasing the increasing reliance on digital platforms for various needs.

Unified Payments Interface (UPI) has emerged as a significant player in digital payments, accounting for $1.5 trillion transactions in 2022. By 2026, 81 per cent of India’s population is expected to have access to smartphones.

The availability of local language and mobile-first content has seen a surge, with approximately 73% of India’s internet subscribers using Indian languages. This has led to an estimated regional language base of 540 million, offering a market size of $53 billion.

Digital infrastructure such as UPI, eKYC, and Aadhaar has reduced the time taken to onboard consumers by 80%, further streamlining the digital experience. A significant shift is observed towards rural-led value e-commerce, with over 60% of demand expected to be driven by tier 2-4 towns and rural India by 2026. Government initiatives like the National Logistics Policy aim to smoothen deliveries to hinterlands, making logistics efficient and cost-effective.

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In hyperlocal mobility, India’s quick commerce market is expected to reach a market size of $5.5 billion by 2025. Companies like Swiggy and Zomato are leading the market, introducing new micro segments such as car-pooling and e-scooter rentals. In health tech, preventive healthcare is expected to grow twofold by 2025, creating significant job opportunities.

Further, social commerce is expected to reach a market size of $ 70 billion by 2030, with small video applications gaining wide appeal. Key mergers and acquisitions in the e-commerce sector have been notable, with companies like Zomato and PhonePe making strategic moves to strengthen their positions.

(with inputs from ANI)