India's e-commerce market set to soar to $325 billion by 2030, anticipates 500 million online shoppers: Report
By Team Asianet Newsable | First Published Apr 29, 2024, 1:45 PM ISTIn a landmark report released by Invest India, the country's e-commerce landscape is poised for unprecedented growth, with projections soaring to a massive $325 billion by the year 2030.
India's e-commerce landscape is on the cusp of a monumental transformation, poised to skyrocket to a staggering $325 billion by 2030, according to Invest India. This surge coincides with the projection of India's digital economy reaching an astounding $800 billion within the same timeframe. Presently valued at $70 billion, online shopping in India constitutes about 7% of the total retail market, indicating vast potential for expansion. Factors such as widespread internet access, affordable internet services, and a growing number of smartphone users in rural areas are expected to drive this promising trajectory in the years to come.
The report highlights India's impressive internet user base, which stands at a staggering 881 million, making it the world's second-largest. With such a substantial digital presence, India is poised to become the third-largest online retail market by 2030. This growth is fueled by the rapid expansion of the country's digital economy, indicating a promising future for its e-commerce sector.
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Invest India's report paints a compelling picture of India leading the charge in the global online shopping arena, with an estimated 500 million shoppers expected by 2030. This significant growth is attributed to several key factors driving the e-commerce boom.
First and foremost is the soaring internet access across the country. Invest India highlights the remarkable rise in internet penetration, with an anticipated 87% of Indian households expected to have internet access by 2025. Particularly noteworthy is the surge in mobile internet usage, with a significant increase in access duration, underscoring the pivotal role of smartphones in driving e-commerce adoption.
The report highlighted the pivotal role of affordability in driving internet penetration in India. With the cost of one gigabyte of data priced at approximately $0.17 (Rs 13.5), a significant portion of the population is incentivized to engage in online activities. This affordability factor has spurred a surge in mobile data traffic from 2018 to 2023, indicating a growing reliance on digital platforms for various needs.
It is projected that by 2026, over 1.18 billion people in India, accounting for over 80% of the population, will have access to smartphones. This substantial increase in smartphone users, along with higher average data consumption per user, is expected to strengthen the digital economy. Additionally, the Unified Payments Interface (UPI) has emerged as a significant player in digital transactions, facilitating transactions worth $1.5 trillion in 2022.
The report also explored other crucial factors driving the e-commerce boom, such as the growing number of smartphone users, the prevalence of the Unified Payments Interface (UPI) in digital transactions, and the expanding availability of content in local languages. These elements contribute significantly to the ongoing growth and evolution of India's e-commerce landscape.
The proliferation of local language and mobile-first content is indeed noteworthy, with around 73% of India's internet users preferring Indian languages. This preference has led to the establishment of an estimated regional language user base of 540 million, contributing to a market valued at $53 billion. This trend underscores the importance of catering to diverse linguistic preferences in India's digital landscape.
Invest India highlights the growing importance of rural-centric e-commerce, foreseeing a significant portion of demand originating from tier 2-4 towns and rural areas by 2026. This trend is reinforced by government initiatives and the emergence of quick commerce.
In the fiscal year 2022-23, Government e-marketplace (GeM) achieved its highest-ever Gross Merchandise Value of $2011 billion, according to Invest India's data. The expected expansion of online shoppers in India is substantial, with a compound annual growth rate (CAGR) of 22% to 88 million in rural India and 15% to 263 million in urban India from 2019 to 2026.
There is a noticeable transition towards rural-centric value e-commerce, with over 60% of demand expected from tier 2-4 towns and rural India by 2026. Government initiatives such as the National Logistics Policy aim to streamline deliveries to remote areas, thereby enhancing logistical efficiency and cost-effectiveness.
The quick commerce market within India's hyperlocal mobility sector is projected to undergo exponential growth, reaching a market size of USD 5.5 billion by 2025. Key players such as Swiggy and Zomato lead this market, while startups like Zepto also capture substantial market share.
In the e-commerce sector, significant mergers and acquisitions are observed, with companies like Zomato and PhonePe strategically positioning themselves for growth. Government schemes such as Jan Dhan Yojana, BharatNet Project, and the implementation of Goods & Service Tax (GST) are identified as instrumental in shaping India's digital economy, according to the report.
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