India's e-commerce to reach Rs. 47,64,650 crore (US$ 550 billion) by 2035, driven by Tier II-III demand

India’s e-commerce industry is projected to reach Rs. 47,64,650 crore (US$ 550 billion) by 2035, driven by increasing digital adoption and evolving consumer behavior, according to a joint report by real estate consulting firm ANAROCK and retail news platform ETRetail. Valued at Rs. 10,82,875 crore (US$ 125 billion) in 2024, the sector is expected to grow to Rs. 29,88,735 crore (US$ 345 billion) by 2030, reflecting a compound annual growth rate (CAGR) of 15%. A key factor in this expansion is rising demand from smaller cities, with the share of online shoppers from Tier II and Tier III cities increasing from 46% in FY20 to 56% in FY24 and projected to reach 64% by FY30. E-commerce firms are strengthening logistics and delivery networks in these regions, tapping into the growing demand beyond metropolitan areas. Meanwhile, India's retail market is expected to triple from its 2019 levels to Rs. 2,16,57,500 crore (US$ 2.50 trillion) by 2035.

Despite the e-commerce boom, physical retail is also witnessing strong demand, with mall vacancy rates declining to 8.1% in 2024 from 15.4% in 2019. The supply of new mall space across India’s top seven cities was limited to one million square feet in 2024, while absorption stood at six million square feet, indicating a leasing surge. Experiential retail, particularly in fashion and food and beverage (F&B) sectors, is a major footfall driver, contributing nearly 45% of total demand. Domestic and international retailers are expanding aggressively into Tier II and Tier III cities, with over 26 million square feet of new mall space expected by 2030. Organised retail’s share is projected to grow from 12% to 17% by 2035, reflecting a shift toward an integrated retail ecosystem where online and offline shopping experiences blend to cater to India’s expanding consumer base.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.