Digital economy to constitute fifth of Indian GDP by 2030: ICRIER report

India's digital economy to grow rapidly, reaching 13.42% of national income by 2024-25, with ICT leading the way.

India’s digital economy will grow twice as fast as the rest of the economy, and constitute 13.42% of national income by the end of 2024–25, as against 11.74% in 2022–23, according to a report prepared by the Indian Council for Research on International Economic Relations (ICRIER) based on a study by the Ministry of Electronics and Information Technology.

By 2030, the report says, India’s digital economy will account for nearly a fifth of overall GDP. This is the first such attempt by the government to quantify the size of India’s digital economy.

To quantify the size of the digital economy, ICRIER has combined definitions by the Organisation for Economic Co-operation and Development (OECD) and the Asian Development Bank (ADB), but also included the “Digital share of traditional industries like trade, banking, financial services, and insurance (BFSI) and education,” essentially casting a wider net to measure the share that digitally-enabled services and activities have in the economy.

Under this framework, “The digital economy in 2022–23 was equivalent to ₹28.94 lakh crore (~$368 billion) in [Gross Value Added (GVA)] and ₹31.64 lakh crore (~$402 billion) in GDP,” the report says. Even under the expanded definition that includes digitising industries, the “traditional ICT” sector remains the largest portion included in these measures and estimates. 

Information and communications technology firms, telecom activities, and electronics manufacturing add up to 7.83% of national GVA, the report highlights. Big Tech players and online “intermediaries” account for 2% of national GVA, as do BFSI, trade and education combined. This, the report says, indicates that “India’s digital economy is steadily moving beyond the realm of the ICT industries, diffusing across all parts of the economy through digital platforms and the digitalisation of brick-and-mortar sectors”.

Notably, the contribution of sectors like e-commerce and digital-only services is highly limited at present. While core digital firms (such as those outlined above) contribute the bulk of value added, e-tailers (an OECD term that the report enlarges by including direct-to-consumer brands) contribute only 0.3%. BFSI firms’ digital activities contribute four times that much.

This will change in the coming years, though, the report says. “In the short run, the highest growth is likely to come from the growth of digital intermediaries and platforms, followed by higher digital diffusion and digitalisation of the rest of the economy,” ICRIER writes. “This will eventually lower the share of digitally enabling ICT industries in the digital economy.”