A continued shift in consumer behavior and the evolution of the business ecosystem will underpin the growth of India’s Internet economy, from approximately $175 billion of consumption in 2022 to $1 trillion by 2030, according to a report by Google, Temasek, and Bain & Company.
The report, ‘The e-Conomy of a Billion Connected Indians’, said the confluence of three crucial forces — digital-seeking behaviors among Internet users in Tier 2+ locations, digitisation of large, traditional businesses along with a growing start-up ecosystem, and the success of India’s homegrown digital public goods or ‘India Stack’ — has positioned the Internet economy for acceleration.
Consequently, the contribution of the Internet economy to India’s technology sector is set to expand, from the present 48 per cent to 62 per cent in 2030, while its share in India’s GDP will increase from 4-5 per cent to nearly 12-13 per cent, it added.
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 startups continuing to play a strong role in driving the internet economy, he added.
Presenting a 2030 outlook across 10 key consumer sectors, the report projects that B2C e-commerce will continue to maintain a leading share of digital services, growing 5-6 times to $350-380 billion by 2030. India’s online shoppers are expected to double by 2030, with currently over 60 per cent of new shoppers located in smaller towns, and increasingly attracted to the Direct-to-Customers (D2C) offerings and accessibility features of digital platforms.
HealthTech and InsurTech, both currently sized at or less than $2 billion today, will demonstrate the largest expansion, to the tune of 9-15 times. SaaS will continue to drive momentum for India’s digital exports, with tech and e-commerce offerings getting a global footprint.
Bolstered by the solid foundation of both adoption and innovation in digital financial services, online payments, lending, and investments will continue to be a cornerstone of the internet economy, servicing the credit and capital needs of both the Tier 2+ consumers as well as MSMEs, the report said.
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Published on June 6, 2023
