Saturday, May 18th, 2024

India emerges as global e-commerce powerhouse: Projected to cross US$800 billion digital economy by 2030

The e-commerce market in India is expected to grow to US$325 billion by the same year, while the digital economy will reach US$800 billion.

With 881 million users, India has the second largest internet user-base globally, according to Invest India, and is set to become the third largest online retail market by 2030.

India is on track to become a global e-commerce powerhouse by 2030 due to the growing digital economy and rapidly growing internet user base.

The future scenario paints a picture of India leading the way in online shopping, with an estimated 500 million shoppers by 2030.

Currently, India’s e-commerce sector has a market size of US$70 billion, which is about 7 percent of the country’s total retail market.

Internet penetration has seen significant growth, with 52 percent of the Indian population, approximately 759 million people, accessing the internet in 2022.

Many factors have contributed to India’s e-commerce boom.

One of the primary drivers is increasing internet penetration, with approximately 87 percent of Indian households expected to have an internet connection by 2025.

The duration of Internet access via mobile has seen an increase of 21 percent compared to 2019.

The number of online shoppers in India is projected to grow significantly with a compound annual growth rate (CAGR) of 22 percent to 88 million in rural India and 15 percent to 263 million in urban India between 2019 and 2026.

India’s affordability also plays an important role in data prices, with one gigabyte of data costing around US$0.17 (Rs 13.5), allowing most of the population to go online.

The growth in smartphone users, projected to reach 1.18 billion by 2026, coupled with an increase in average data consumption per user, drives the digital economy.

Mobile data traffic is set to triple from 2018 to 2023, reflecting increasing reliance on digital platforms for various needs.

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

The availability of local language and mobile-first content has seen a rise, with about 73 percent of India’s internet subscribers using Indian languages. This brings the estimated regional language base to 540 million, taking the market size to US$53 billion.

Digital infrastructure like UPI, eKYC and Aadhaar have reduced the time taken to engage consumers by up to 80 per cent, making the digital experience even more streamlined.

A significant shift towards rural-led value e-commerce has been witnessed, with over 60 per cent of demand by 2026 expected to be driven by tier 2-4 cities and rural India.

Government initiatives such as the National Logistics Policy aim to streamline delivery in the hinterland, making logistics efficient and cost-effective.

In hyperlocal mobility, India’s instant commerce market is expected to reach a market size of US$5.5 billion by 2025. Companies like Swiggy and Zomato are leading the market by introducing new microsegments like car-pooling and e-scooter rentals.

In health tech, preventive health care is expected to double by 2025, creating significant employment opportunities.

The market size of social commerce is expected to reach US$70 billion by 2030, with short video applications becoming widely popular.

Major mergers and acquisitions have been notable in the e-commerce sector, with companies like Zomato and PhonePe taking strategic steps to strengthen their position.

Government initiatives such as Jan Dhan Yojana, BharatNet project and the introduction of Goods and Services Tax (GST) have played a significant role in shaping India’s digital economy.

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