India is currently recognized as the fastest-growing major economy in the world, contributing approximately 15 percent of global economic growth, as per the International Monetary Fund. Therefore, being a fastest-growing major economy, e-commerce is playing a pivotal role in this growth. The sector is driving the expansion of Fast-Moving Consumer Goods (FMCG) and retail industries.
Prime Minister Narendra Modi recently emphasized India’s trajectory of “sustained high growth,” underpinned by solid economic fundamentals. He also declared the 21st century as “India’s Century,” emphasizing the country’s emerging global leadership.
As India is on track to become the world’s third-largest economy within this decade, we are witnessing significant expansion across various industries and sectors. One notable sector is e-commerce, which not only serves as a key driver of growth but also plays a pivotal role in facilitating and democratizing manufacturing and marketing activities. According to a recent report by Deloitte titled “SPURring Growth in FMCG, Retail, and E-commerce Sectors in India,” the compound annual growth rate (CAGR) of India’s e-commerce sector is projected to be 21 percent, with expectations that the sector will reach $325 billion by 2030.
E-com: A booster for growth
Recent data from the Ministry of Statistics and Program Implementation (MoSPI) shows a decline in economic growth in the first half of 2024-2025. Economists and policymakers emphasize the need for targeted growth boosters. E-commerce presents a significant opportunity, with its broad connections across sectors, digitization, and expanding internet access. India had 895 million internet connections in June 2023, and its smartphone base is projected to exceed 1.1 billion by 2025, propelling the digital economy to reach US$ 1 trillion by 2030.
China’s rapid rise as the world’s manufacturing hub is driven by e-commerce, with a 9.9% annual growth rate in the sector. India, through its Digital India Mission, has become a leading digital economy. InvestIndia reports that rural India will drive digital transformation & E-commerce growth, with the market expected to grow from Rs 12.2 trillion ($147.3 billion) in 2024 to Rs 24.1 trillion ($292.3 billion) by 2028.
MSME sector flourishes
The MSME sector thrives, creating new opportunities, particularly for women-led businesses. Rising consumer demand, increased internet access, and digital payment systems like UPI are boosting the e-commerce landscape.
Furthermore, the Indian MSME sector has experienced significant growth due to the rise of digital markets and e-commerce, creating a level playing field, job opportunities for youth, lower business costs, and breaking geographical barriers. It has provided livelihoods and new opportunities for rural populations, offering marketing platforms to artisans, craftsmen, and women entrepreneurs.
E-commerce has also empowered women-led businesses, unlocking untapped potential. Many women-driven enterprises have thrived in India and globally, leveraging e-commerce and support in skill development.
According to the 2023 Economic Survey, MSMEs contributed nearly 70% of India’s e-commerce sales in 2021, 40% of exports, and 6.22% of GDP. Online shoppers in rural India are expected to grow by 22% annually to 88 million, while urban India will see a 15% growth to 263 million by 2026. To support MSME growth, focus on capacity building, skill development, increased investments, and reduced regulatory burdens is essential. The collaboration between the Ministry of Skill Development and Flipkart’s Supply Chain Operations Academy aids in workforce training for digital markets.
Convenience to customers
E-commerce offers unmatched convenience, allowing consumers to shop anytime, anywhere, with access to a wide range of products and services. Consumers can compare prices, read reviews, and make informed decisions without visiting physical stores. Personalized recommendations and AI bots like Flipkart’s ‘Flippi’ and Amazon’s ‘Rufus’ enhance the user experience by offering virtual assistance and addressing concerns.
E-commerce also offers cost savings, with exclusive deals, price comparisons, easy returns, and doorstep delivery, making it a preferred choice. The growth of UPI payment systems, such as Google Pay and PhonePe, further facilitates accessibility.
Last words
As a sunrise sector, e-commerce is boosting India’s economy and supporting the “Make in India” initiative, enabling local players to compete globally. The growth in India’s FMCG, retail, and e-commerce sectors, as well as B2C and B2B growth, will contribute to GDP. A strategically planned regulatory framework will be key to fostering fair competition and innovation.
Source: https://www2.deloitte.com/in/en/pages/consumer-business/articles/spurring-growth-in-fmcg-retail-and-e-commerce-sectors-in-india.html
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