India’s digital economy to register 6x growth, reach $1 trillion by 2030

India’s internet economy is set to grow six-fold (6x) in the next eight years to reach $1 trillion by 2030, from approximately $175 billion at present. The phenomenal rise of online usage has put India ahead of the world’s largest digital economies, says a recent report, titled ‘The e-conomy of a Billion Connected Indians’.

The report jointly prepared by Google, Temasek, and Bain & Company also states that a continued shift in consumer and merchant behaviour, matched with strong investor confidence, has ushered India into its ‘Digital Decade’ and put its internet economy on the path to reach $1 trillion by 2030.

Digital services are fast becoming integral to India’s 700 million plus internet users, including the 350-million digital payment users and 220-million online shoppers. As India undergoes a dramatic boom that will see household consumption doubling by 2030, digital commerce will invariably become even more entrenched in Indians’ everyday experience.

Sanjay Gupta, Country Head and Vice President of Google India, said: “Three foundational forces—deepening consumer digital adoption, technology investments by businesses, and digital democratisation with the India Stack—have placed India at a turning point in its digital transformation. Structural shifts in consumption potential are opening up a vast opportunity for start-ups, large businesses and MSMEs to power India’s internet economy towards a projected growth of 6x, reaching a $1 trillion by 2030. We’re pleased to join Bain and Temasek in this first-of-its-kind multidimensional view of the digital landscape, and are confident and committed to partner India in this extraordinary opportunity.”

Overall, internet sectors are on positive growth paths, with business-to-consumer (B2C) e-commerce contributing approximately a third of the value. Largely driven by increased penetration in smaller towns and cities, B2C e-commerce’s gross merchandise value (GMV) sits at $65 billion today with expectations that it will swell 6x to reach $380 billion by 2030. Meanwhile, other sectors like online travel and ride-hailing are also projected to follow similar trajectories with high probability of scaling at least 4-5x over the decade. Lastly, widening consumer and merchant acceptance of digital tools and solutions means digital financial services can also expect to see promising growth ranging from 8–13 per cent CAGR between 2022-2030 across subsectors (i.e., payments, lending, investments and insurance).

Per the report, all internet sectors are on steep trajectories and digital exports have immense opportunities. These are promoted by various success stories in software-as-a-service (SaaS), edtech and B2B e-commerce, and many Indian businesses are eager to plant their flag on foreign shores. However, three key enablers will help unlock the opportunity—a skilled and creative talent base, lessons gleaned from India’s sizable domestic market, and more proactive regulatory support.

Parijat Ghosh, Managing Partner, Bain and Company (India), said: “India’s internet economy has remarkable potential and is expected to grow at 6x over the next decade, with B2C e-commerce driving 40 per cent of the digital GMV, followed by B2B sectors and SaaS. The pace of digital disruption is expected to accelerate as traditional businesses and MSMEs increase investments in digitisation, in addition to start-ups continuing to play a strong role in driving the internet economy. We expect to see players go beyond their core to cater to the consumer of the future and adopt new business models to capitalise on the growing opportunity.”

Talking about the report, Vishesh Shrivastav, Managing Director, Investment (India), Temasek, said: “Widespread digital adoption among consumers, as well as businesses, is accelerating the growth of India’s internet economy at an unprecedented rate.”

The report also indicates that the greater openness of consumers in smaller centres (tier-2+) to experimentation with new brands and products, and to directing their increased spending towards personalisation and premiumisation, especially for healthtech and edtech. Against a national average of 70 per cent, presently 82 per cent of tier-2+ consumers are willing to pay higher prices for personalised and customised products and services, while 84 per cent of consumers in tier-2+ centres would prefer an e-consultation with a reputed doctor to a live appointment with a friend- or family-recommended doctor, compared with 75 per cent nationwide.