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India's e-commerce sector is on a rapid growth trajectory, with ANAROCK projecting a 15% CAGR, reaching USD 550 billion by 2035 from USD 125 billion in 2024. This expansion is fueled by rising internet penetration, smartphone adoption, and digital payments, along with growing demand from Tier 2 and 3 cities. India's overall retail market is also set to triple to USD 2,500 billion by 2035. However, mall supply struggles to keep pace with demand, with vacancy rates dropping to 8.1% in 2024. Retailers are now expanding into smaller cities, driving future growth in both online and offline retail.
India's e-commerce sector is undergoing a significant transformation, with ANAROCK's latest report projecting a robust compound annual growth rate (CAGR) of 15%, propelling the market to USD 550 billion by 2035. In 2024, the sector was valued at USD 125 billion and is expected to reach USD 345 billion by 2030, reflecting its rapid expansion and increasing dominance in the retail landscape. Advertisement
Several factors are driving this unprecedented growth. Rising Internet penetration, widespread smartphone adoption, and the expansion of digital payment infrastructure have made online shopping more accessible. Additionally, a young, tech-savvy population and government initiatives like 'Digital India' have played a crucial role in strengthening the sector. The ongoing improvements in logistics and supply chain networks have further streamlined e-commerce operations, enabling faster and more efficient deliveries across the country.
Anuj Kejriwal, CEO & MD at ANAROCK Retail, noted that e-commerce players are now expanding beyond metropolitan areas to cater to the rising demand from smaller towns and cities. The share of online shoppers from Tier 2 and 3 cities has increased significantly, rising from 46% in FY2020 to 56% in FY2024, and is expected to reach 64% by FY2030. This shift underscores the growing digital adoption and purchasing power in these regions.
Beyond e-commerce, India's broader retail industry is also poised for substantial growth. The market size is projected to triple from its 2019 levels, reaching USD 2,500 billion by 2035. This expansion is being fueled by increasing urbanization, rising disposable incomes, and the expanding middle class. The retail ecosystem today is characterized by a dynamic mix of sprawling malls, bustling traditional markets, and a thriving e-commerce segment, offering consumers a diverse shopping experience.
Despite the growing demand, mall supply has struggled to keep pace. In 2024, new mall space added across the top seven cities amounted to just 1 million sq. ft., while absorption stood at 6 million sq. ft. Kejriwal highlighted that supply shortages are particularly evident in the post-pandemic era, where leasing activity has surged, largely driven by the rise of experiential retail. Apparel and food & beverage (F&B) sectors remain the primary footfall drivers, contributing nearly 45% of total demand. The mall vacancy rate has also witnessed a sharp decline, dropping from 15.4% in 2019 to 8.1% in 2024, further reinforcing the sector's post-pandemic recovery.
To meet the growing demand, major domestic and international retailers are aggressively expanding their footprint in Tier 2 and 3 cities. By 2030, these regions are expected to account for over 26 million sq. ft. of new mall space, further integrating modern retail into India's dynamic shopping landscape.
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