Digital adoption, UPI payments fuel India’s e-commerce expansion

AI tools are increasingly used by retailers to personalise shopping and improve product discovery.

India’s e-commerce market is expected to grow by 12.4% in 2026, reaching $225.9b (INR19.7t), according to a report by GlobalData.

The report said the sector grew by an estimated 11.3% in 2025 to $200.9b (INR17.5t), driven by more consumers shifting from offline to online shopping due to convenience and retailer promotions. The market is projected to reach $314.5b (INR27.4t) by 2029.

“The e-commerce market in India has experienced rapid growth in recent years, driven by broader digital adoption, increasing internet and smartphone penetration, and the availability of secure online payment tools,” said Kartik Challa, senior banking and payments analyst at GlobalData.

Retailers are also increasingly using artificial intelligence to personalise product discovery, improve search, compare products, and tailor content based on consumer behavior, Challa said.

Government policies and private-sector initiatives have also supported the sector. Tax cuts under India’s Goods and Services Tax in September 2025 on several consumer goods categories helped boost spending and e-commerce sales.

Major retailers including Reliance Retail, Amazon, and Flipkart participated in the government’s “GST Bachat Utsav” campaign, which required companies to display GST discounts on invoices and report savings passed on to consumers.

Companies are also expanding their presence in the market. Shein re-entered India in February 2025 through a partnership with Reliance Retail, while IKEA launched its e-commerce platform in the Delhi-NCR region. Luxury brand Chanel launched its Indian e-commerce platform in August 2024.

In terms of payments, alternative methods such as digital wallets and mobile payments via the Unified Payments Interface are widely used. Platforms such as Google Pay and Amazon Pay remain popular.

Credit card usage is also rising due to benefits such as installment payments, rewards, cashback, and discounts offered through partnerships with online retailers.