Indian consumer tech market will grow three times to $300 billion by 2027: reports

India’s consumer technology market is estimated to reach $300 billion by 2027, according to estimates by consulting firms, investors and consumer internet firms. The online retail industry, meanwhile, is predicted to top $160 billion by 2028.

A joint report by consulting firm Bain & Company and ecommerce major Flipkart said the online retail industry will likely return to annual growth of between 23% and 25% through 2028.

A report by venture capital firm Chiratae Ventures, consulting and market research company 1Lattice and Google predicted the overall Indian consumer internet segment to roughly triple from its current size to $300 billion by 2027, driven by fashion, mobility and media segments.

The online retail industry is expected to end 2023 at $57-60 billion, growing 17-20% from last year, the Bain-Flipkart report said. This will correspond to between 240 million and 260 million annual transacting shoppers in Indian online retail, but the share of online spending will still only be about 5% to 6% of total retail spending. In comparison, online retail is about 24% of overall retail spending in the US and over 35% in China.

Also read | Fashion, mobility segments to drive Indian consumer tech market to $300 billion by 2027: report

“There is no doubt that there was an erosion of sentiment due to higher inflation and worsening broader economic conditions, but we expect that the market will recover from that. The underlying headroom remains very high, and we should see a strong bounce back especially in discretionary categories like apparel and electronics,” said Manan Bhasin, partner at Bain & Company.

Growth in gross domestic product per capita, often read as an indicator of purchasing power, “will be critical to unlock e-retail growth over the next decade”, the Bain report said.

“In India, an estimated 60–70 million households will join the upper-middle and upper-income cohorts, which in turn are likely to account for at least 80% of e-retail spending by 2028,” the report added.

Business models like quick commerce, fast fashion, hyper-value platforms and live commerce will be essential in driving the penetration of online retail in the country, said Sankalp Mehrotra, vice president of monetisation at Flipkart.

For instance, about 50% of online grocery buying is currently driven by quick commerce, and though 80% of quick commerce volume is concentrated in metros and tier-1 cities, the uptake is essential to opening up grocery as a category for online buying, Bhasin said.

Hyper-value platforms that provide cheap and unbranded products will be essential to driving deeper into tier-2 and beyond, he added.

At the same time, an increasing number of shoppers are from non-metro cities, with 70% of them coming from tier-2 cities and beyond, while over 30% of shoppers are young, born in 1997 or later, the Bain report said. Over 30% of online shoppers were from low-income or low-middle-income segments.