CloudResearch & Whitepapers

India’s Internet Economy is Poised To become $1 Tn by 2030: RedSeer

SaaS market size stood at $3.5 Bn in FY21 and is expected to grow to $8 Bn by FY26, at a CAGR of 18%, said the report.


India’s internet economy is surging ahead with over 50% y-o-y growth in 2021, and is poised to be a staggering $1 trillion economy by 2030, said a RedSeer report.

India’s new digital revolution is further enabled by the growing tech adoption in the B2B space. The SaaS market size, which stood at $3.5Bn in FY21, is expected to reach $8Bn by FY26, with a CAGR of 18%. Tech firms are moving towards profit or are already profitable, with a $150-200 million profit by India internet in FY21, the report said.

This healthy expansion is being fueled by a rapidly increasing internet penetration rate, high-speed internet access, and increased online shopping and digital content consumption.

“India’s journey to a $1 trillion consumer internet economy has been a unique story of multiple internet sectors such as e-tailing, e-Health, foodtech, online mobility, and quick commerce, coming together to create a strong foundation for a consumption-led economy”. He further said, “the ongoing journey from digital-first to digital forward was a result of multiple internet sectors having shown strong momentum post COVID,” says CEO and founder of RedSeer, Anil Kumar.

Considering India’s population is extremely heterogeneous, and the needs of one segment in the population may differ from that of the other segments, the report identifies three cohorts – the first segment comprised 80-100 million, who draw an annual income of more than $12K and expect high quality services. This was followed by a second cohort that comprises 100-200 million price conscious Indians with an annual income of $5K-12K.

The third segment, according to RedSeer, comprises 400-500 million populations in the rural segment and Tier 2 cities that draw an annual income of less than $5K. This, the reports, says is the biggest and the most difficult group to reach.

According to RedSeer, many vernacular first apps have deployed their services towards the third group and have been able to address a large Total Available Market (TAM) for themselves. Additionally, omni-channel approaches and verticalized super apps are also being deployed to further serve the needs of this audience.

Kumar said, “The key internet economies, namely e-tail, e-health, foodtech, online mobility, and billpay and recharge experienced a downward spiral during COVID, but re-emerged much stronger and shocked us with commendable post-COVID recovery. An expanding and maturing user base which is increasingly satisfied with internet services has further propelled the growth of internet-based businesses.”

Another major contributor to this development, he points out is an increasingly reliable and democratized logistic backbone. Logistics used to be the domain of large, established companies with deep pockets and complex supply chains.

But today, a new class of logistics provider is emerging with a crop of nimble, innovative startups that are improving the way goods move across the country at an unprecedented pace and scale. Headquartered around the country, these companies use an assortment of technology and human intermediaries to provide reliable and on-demand delivery services at a fraction of the cost traditional logistics providers were charging.

Investors are recognizing India’s golden opportunity without a second thought. In just 2021, more than $40 Bn of funding and 42 new unicorns were birthed. This is primarily because the country’s economy is becoming more skill-based and services-oriented, so more jobs are being created for skilled workers, which in turn is a major draw for investors.

It is expected that 70 odd tech IPOs will emerge by 2025. This surge in tech IPOs will be fueled by accelerated digitization, government initiatives for startups, increasing local investors with high equity, and private equity funding in tech companies.

Leave a Response