Tuesday, 29 Apr, 2025
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Digital boom surges as UPI penetration hits 25%, solidifying its role in daily transactions. Smartphone adoption nearly doubles to 938.3 million in 2024 from 485.1 million in 2020, driving mobile connectivity and fintech growth.
India’s digital economy is on track for exponential growth, with an additional $900 billion opportunity by 2030, according to a December report by Motilal Oswal. Currently valued at $300 billion—8 per cent of GDP—the sector is expected to quadruple to $1.2 trillion, contributing 20 per cent to the economy.
The expansion will be fuelled by deeper internet penetration, fintech innovation, e-commerce acceleration, and digital infrastructure investments. With government initiatives like Digital India and rapid advancements in AI, cloud computing, and cybersecurity, the sector is set to become a cornerstone of India’s economic transformation.
Worth mentioning here is that the digital economy is expanding rapidly, making it the world’s third-largest digitized country at an aggregate level, according to the State of India’s Digital Economy Report 2025 by ICRIER. However, the country lags in user-level digital adoption, ranking 28th out of 32 nations studied—comprising G20 members and select others.
Notably, the gap highlights the need for deeper digital penetration beyond urban centres, improved digital literacy, and enhanced affordability. While India leads in digital infrastructure, bridging the adoption divide will be crucial to unlocking its full economic potential.
The digital boom is being driven by Unified Payments Interface (UPI), with 25 per cent user penetration, underscoring its role in everyday transactions. Meanwhile, smartphone adoption has nearly doubled, soaring from 485.1 million in 2020 to 938.3 million in 2024, highlighting the rapid expansion of mobile connectivity.
This surge is reshaping financial inclusion, powering e-commerce growth, and accelerating digital services, solidifying India’s position as a global digital powerhouse.
India has achieved a high level of digitalization at the aggregate level, yet the average Indian’s digital adoption remains modest, according to the ICRIER report. The report ranks India as the third-largest digital economy, with a score of 35.9 out of 100, behind the US (68.5) and China (62.5).
The country boasts the world’s second-largest mobile and internet network by user base and leads globally in digital transaction volumes and ICT service exports. However, bridging the gap in individual digital adoption will be key to unlocking India’s full digital potential.
More significantly, the digital economy is punching above its weight. Despite employing just 2.55 per cent of the workforce, the sector contributed 11.74 per cent to GDP— $402 billion (Rs 31.64 lakh crore) in 2022-23—making it five times more productive than the broader economy.
The backbone of this growth is the ICT sector and electronic manufacturing, which together account for nearly 8 per cent of gross value added (GVA). Digital platforms and intermediaries add another 2 per cent, while tech-driven transformation in traditional sectors such as banking, retail, and education further amplifies its footprint.
Momentum is set to accelerate. By 2029-30, the digital economy’s share of GVA is projected to hit 20 per cent, outpacing both agriculture and manufacturing. AI adoption, cloud expansion, and India’s dominance in Global Capability Centres—hosting 55 per cent of the world’s GCCs—will keep it on an upward trajectory. As the digital sector’s influence expands, its ability to sustain rapid job creation and economic resilience will be closely watched.
