If you’re based in Europe, you may never have considered the Indian e-commerce market at all — but it’s worth looking at. The e-commerce sector in India is growing rapidly, at an astounding rate of 18% per year.  With over 900 million internet users as of 2023, the country is expected to become the world’s second-largest e-commerce market by 2030. In this article, we’ll highlight the characteristics, strengths, and opportunities that define e-commerce in India.

Figures & Facts

Stretching from the Himalayas in the north to the coast regions in the south, India covers an area of over 3.2 million square kilometers. The parliamentary democratic republic is composed of 28 states and 8 union territories and is home to more than 1.4 billion people of diverse ethnicities, religions, and mother tongues. Economically, India is considered an emerging economy and is one of the G5 (along with Brazil, China, South Africa, and Mexio) and BRICS nations (Brazil, Russia, India, China, South Africa, Iran, Egypt, Ethiopia, and the United Arab Emirates). It also belongs to the G20 intergovernmental forum.

With a Gross Domestic Product (GDP) of $3.7 trillion US dollars in 2023, India stands as the fifth-largest economic power in the world. With a growth rate of 8%, it is the fastest-growing economy among the G20 group.

However, due to its massive population, India is also one of the poorest countries globally. The GDP per capita is only $2,600 US dollars, and according to the Human Development Index (HDI), India falls under the category of “medium human development,” ranking 134th out of 193 countries worldwide in 2023.

Despite the country’s economic inequality, India’s increasing prosperity and cultural growth are evident in its well-developed infrastructure and industrial base, its pool of scholars and technology experts, rapid agricultural expansion, and the cultural exports of its music and film industry.

India’s population remains predominantly rural. However, it boasts three of the most populous metropolises globally – Mumbai (21 million), Delhi (33.8 million), and Kolkata (15.6 million). Many of the world’s largest IT and software companies now have offices in India, and cities like Bengaluru, Chennai, and Hyderabad are among the fastest-growing high-tech hubs globally.

The Indian Rupee (INR) is divided into 100 Paise. Over the past 10 years, one Indian Rupee has been worth slightly over 0.01 Euros. The time difference between central Europe and India is 3.5 hours during standard time. Unlike Europe, India does not observe daylight saving time.

Language and localization

India was a part of the British colonial empire for nearly a century, and India remained part of the British Commonwealth even after gaining its independence. As a result, English is one of the country’s official languages alongside Hindi, which is the language used by India’s central government.

In addition to these two main languages, myriad languages and dialects are spoken in the country. Indo-Aryan languages, including Hindi, Bengali, and Urdu, are spoken by around 75% of the population as their native language. Hindi, spoken by approximately 40% of the population, is the most prevalent mother tongue. In southern India, Dravidian languages such as Telugu, Tamil, and Kannada are spoken, with around 25% of the population using them as their mother tongue. Overall, the Indian government recognizes 121 languages, with 22 being constitutionally acknowledged. English plays a crucial role as a common language facilitating communication among speakers of different mother tongues.

When localizing your website for India, you should not rely on English alone. At the very least, you will want to offer Hindi and English, but even then you will be losing many potential customers. You would ideally want to start by translating your website into the highest-frequency languages: Hindi, Bengali, Telugu, Marathi, Tami, and Urdu. Once you get some website traffic and sales, you’ll be able to look at your website statistics to see where your visitors are coming from, and then adjust the languages you offer accordingly.

Trends and Insights

Driven by increasing smartphone penetration, the rollout of the 4G network, and rising consumer prosperity, the Indian e-commerce market is growing exponentially and poised to hit $1 trillion US dollars by 2030. A huge portion of that growth is expected to come from “Tier 2 cities” — that is, cities with populations of 50,000 – 100,000 — which will contribute 88% of the new online consumers.

A young, digitally savvy population, increasing internet and smartphone penetration, and a dynamic economy are key drivers of Indian e-commerce. Regarding internet penetration, there have historically been significant disparities between major cities like Delhi, Mumbai, and Kolkata and the rural areas of the country. Nonetheless, 918.19 million people in India had internet access as of September 2023, giving the country an internet penetration rate of 65%.

By 2025, around 87% of Indian households will have an internet connection, and the duration of mobile internet access is expected to rise by 21% compared to 2019.

The most popular categories for online purchases are electronics and apparel.  Other popular categories include ed-tech, hyperlocal services, and food-tech. The number of online shoppers is expected to increase to 500 – 600 million by 2025.

Until 2016, cash on delivery accounted for 45% of online purchases in India. The Indian government attempted to change this trend in November 2016 by promoting credit card usage. The shift away from cash is evident in the increasing number of payments made with credit cards and mobile wallets. Currently, the government is encouraging digital payment technologies such as UPI, RuPay, DigiLocker, and eKYC. The government reported a 76% increase in digital payment transactions and a 91% increase in digital payment value in 2022. Support for these payment schemes was planned to continue through 2023 and 2024.

Strengths & Opportunities

As of 2023, about 60% of e-commerce sales come from Tier 2 cities and smaller towns. E-commerce is no longer something restricted to major metropolitan areas. And although incomes vary drastically between rural and urban areas, Invest India reports that the average selling price (ASP) is only slightly lower in smaller cities and towns than in major cities.

The Indian government has had several initiatives in the past decade to increase internet access and lower data costs, especially in rural areas. These have been largely successful, as seen by the drastic increase in internet users over the past 10-15 years. Mobile data traffic has tripled from 2018 to 2023, according to a report by Business Insider. Currently, the BharatNet program aims to bring broadband to 250,000 rural villages in the country.

There have also been significant investments in e-commerce infrastructure in recent years. Amazon has already invested over $6.5 billion and is planning to invest a total of $26 billion by 2030, while Walmart’s Flipkart and Google have also invested billions in digitization and infrastructure. This illustrates the enormous potential that these global players see in the Indian e-commerce market.

However, while the e-commerce market in general is rapidly gaining traction, cross-border e-commerce is hindered by several factors such as customs fees, high shipping costs, and expensive returns. From a customer satisfaction perspective, it may be best to set up shop within the country rather than shipping from overseas.

Import Duties, Taxation & Customs Procedures

There is currently no free trade agreement between the EU and India, so import fees can quickly add up. However, this may change in the future, as the EU is negotiating with India for a free trade agreement that would reduce these barriers.

Currently, the following duties are levied:

  • Landing charges: 1% of the total CIF value of the shipment
  • Basic Customs Duty (BCD): This is levied on the total CIF value of the shipment + landing charges and can range from 0-100% depending on the type of product.
  • Social Welfare Surcharge (SWS): This is 10% of the BCD duty.
  • Integrated Good & Services Tax (IGST): This is levied on the total CIF value of the shipment + BCD + SWS. There are five different IGST tax rates: 0%, 5%, 12%, 18%, and 28%.

Commercial goods generally face an 18% IGST tax, but there are exceptions. For instance, spare parts for cars are taxed at a higher rate of 28%, while agricultural goods enjoy a reduced tax rate of 5%.

To bring goods into the country, importers must be registered with the Directorate General of Foreign Trade (DGFT). Goods are declared through customs for either free circulation or warehouse procedures, with the declaration required within one day of the goods’ arrival.

In conclusion

India’s e-commerce landscape holds enormous potential. Although the country is still developing, internet access has increased drastically in recent years and the number of potential customers is truly astounding. Companies that get into the game now can ensure their place in this rapidly growing market.


autor_eurotext_100Author: Eurotext Editorial Team

We explain how internationalization works, provide tips for your translation projects and outline some of the technology and processes used. We also report on current e-commerce developments and cover a range of language-related topics.