India was expected to have the fastest-growing retail e-commerce market among 20 countries between 2023 and 2027, with a compound annual growth rate (CAGR) of 14.1%, according to industry estimates published by Statista in 2023. It is not yet one of the largest markets: the Indian e-commerce market was worth 63.17 billion dollars at the time, and average revenue per online shopper was a fraction of China’s. This post, written in late 2023, looks at the figures behind the growth, the main players and the problems the sector still has to solve.
For comparison, Argentina and Brazil were also among the fastest-growing e-commerce markets over the same period, each with a CAGR of over 13.6 percent. Worldwide retail e-commerce was projected to grow at a CAGR of 11.16 percent.
Why e-commerce is growing in India
Several factors explain the growth.
A large population
India has a population of over 1.3 billion people, which gives online sellers a very large potential customer base. The original version of this post described India as the second-most populous country in the world. Correction (October 2026): the UN Department of Economic and Social Affairs projected that India would overtake China as the most populous country in April 2023, before this post was published.
More people online
Cheap smartphones and low-cost data plans have brought many more Indians online, and a growing middle class is buying on the internet.
Digital payments
The government’s push for digital payments and the spread of payment gateways have made it easier for consumers to pay online securely.
Government programmes
Initiatives such as ‘Make in India’ and ‘Digital India’ have opened the market to e-commerce businesses, both domestic and international.
E-commerce retail sales CAGR 2023-2027, by country
Indian online shopping was expected to reach $100 billion by 2027. Growth is fast, but other markets are much larger: US e-commerce was approaching $1 trillion. Average revenue per user (ARPU) shows how far India has to go. India’s ARPU in 2023 was 77 U.S. dollars. In neighbouring China it was over 1,200 U.S. dollars, more than ten times higher.
The main Indian e-commerce companies
In April 2017 the leading online retailer was Amazon India, with sales of over $500 million, while Flipkart and Myntra led among local companies. In a May 2020 survey, most respondents said e-commerce platforms would be able to deliver in India after the coronavirus ban was lifted.
Flipkart, founded in 2007, was one of India’s first large e-commerce companies and is known for its wide product range. Amazon entered India in 2013, has invested heavily in the country and was one of the largest players when this post was written. Reliance JioMart, backed by Reliance Industries, uses the reach of the Jio network and was growing quickly when this post was written.
India: top 10 online stores
By e-commerce net sales in India in 2021, Bigbasket.com was the largest online store, with $1,222 million. Ajio.com followed with $1,119 million and Reliance Digital was third with $752 million. Grofers.com ranked fourth, with annualised net sales of US$350 million in 2021.
E-commerce market size India 2014-2030
The Indian e-commerce market was valued at 22 billion U.S. dollars in 2018 and was predicted to reach $350 billion by 2030. The market is competitive, with many local and multinational companies fighting for share. These market-size figures appear to use a wider definition than the $63.17 billion and $100 billion retail figures above, so compare them with care.
Wider digitisation and cheaper internet access pushed digital sales up. E-commerce sales in India were predicted to grow 25% in 2018, with growth expected to slow by 2022. Indian retail e-commerce revenue per user passed $50 in 2018 and was forecast to reach $75 by 2024.
Challenges and opportunities
The sector still has problems to solve. India’s size makes logistics difficult, though investment in warehousing and distribution is addressing it. Competition is intense, and the rules for e-commerce keep changing, so businesses have to keep adjusting to new policies.
The openings are also clear. E-commerce companies are moving into rural India, where online shopping is still less common. AI, machine learning and data analytics are being adopted across the sector. And Indian sellers can use online channels to export: e-commerce for export-import businesses explains how, and how to start an import and export business in India covers the registrations needed first. Cross-border sellers also have to classify each product correctly for customs; the usual pitfalls are listed in HSN classification challenges in the e-commerce sector.
Revenue growth of the e-commerce market in India, 2018-2027
Revenue in India’s e-commerce market was projected to grow 10 percent in 2023. The highest growth rate was 53% in 2020, when COVID-19 lockdowns and social distancing moved grocery and other essential shopping online.
All figures are estimates and forecasts published before November 2023; check the source for newer data.
Source: Statista