E-commerce in India scales new highs, eyes $160B by 2028

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TL;DR

India’s e-retail market crossed $65B in 2025 and is growing 20% annually, driven by non-metro demand, digital payments, and faster delivery — pointing to a $160B opportunity by 2028.

Article

India’s e-retail market has surpassed $65 billion in 2025 and is projected to grow at over 20% annually, according to a joint report by a top management consulting firm and Flipkart. The surge reflects a structural shift in how Indians shop, driven by deeper internet penetration, rising digital payments adoption, and expansion into tier-2 and tier-3 cities. This growth matters because it signals a long-term transformation in consumption patterns, logistics infrastructure, and competitive dynamics across retail.

The report highlights that online retail penetration is still relatively low compared to global benchmarks, leaving significant headroom for expansion. Categories such as fashion, electronics, and grocery continue to drive volumes, while quick commerce and same-day delivery models are accelerating consumer expectations around speed and convenience.

“The next phase of e-retail growth in India will be fueled by new users from smaller cities and increased purchase frequency,” the report notes. This shift is already visible, with a majority of new customers coming from non-metro regions, supported by improved last-mile delivery networks and vernacular interfaces.

Another key driver is the evolution of digital infrastructure. UPI-led payments, affordable smartphones, and better logistics have reduced friction in online transactions. According to the report, India’s e-retail market could reach $160 billion by 2028 if current growth trends hold, underlining the scale of the opportunity for platforms, brands, and logistics players.

However, the rapid expansion also intensifies competition. Marketplaces, D2C brands, and quick commerce players are all vying for consumer attention, leading to higher customer acquisition costs and pressure on margins. Profitability, therefore, remains a key challenge even as gross merchandise value grows.

The takeaway is clear: India’s e-retail boom is no longer a metro-driven phenomenon — it is a nationwide consumption shift. Companies that invest in supply chains, regional customization, and cost efficiency will be best positioned to capture the next wave of growth.