Context:
India has established itself as a global leader in digital infrastructure and economic digitalization, ranking third globally in the overall digital economy. However, its user-level digital adoption lags significantly behind, ranking 28th out of 32 countries analyzed by ICRIER. This presents both challenges and opportunities for India’s digital expansion.
Key Findings
| Metric | India’s Score (%) | Median Score (32 Countries) | Gap |
|---|---|---|---|
| Internet Access | 58% | 93% | -35% |
| Smartphone Usage | 49% | 82% | -33% |
| E-commerce Adoption | 28% | 52% | -24% |
| Wireless Coverage | 99% | 100% | -1% |
Strengths of India’s Digital Economy
- Third-Largest Digital Economy
- India’s overall digital economy score (35.9) is ahead of most developing nations but behind the U.S. (68.5) and China (62.5).
- It has the second-largest mobile and internet network by number of users.
- India leads in digital transactions volume and ICT service exports.
- Strong Digital Infrastructure
- 99% of the population is covered by wireless internet, ensuring connectivity potential.
- Digital public infrastructure (e.g., UPI, Aadhaar, ONDC) has enabled rapid economic digitization.
Challenges
- Digital Access Gap
- Only 58% of Indians have internet access, leaving over 40% of the population digitally excluded.
- In contrast, the median score for other countries is 93% internet access, meaning India has one of the largest digital access gaps globally.
- Low Smartphone Penetration
- With 49% smartphone usage, India trails significantly behind the median (82%).
- Limited affordability, digital literacy, and patchy connectivity in rural areas contribute to this gap.
- Slow E-commerce Adoption
- Only 28% of Indians engage in e-commerce, well below the global median of 52%.
- This suggests limited trust in digital payments, logistical constraints, and a preference for traditional retail.
Policy Implications & Growth Opportunities
India’s digital economy is expected to contribute nearly 20% of GDP by 2030, but user-level adoption needs to accelerate. Bridging the digital gap could unlock:
- Higher economic participation, especially for rural and underserved populations.
- More job creation in digital services, fintech, and e-commerce.
- Stronger domestic consumption via e-commerce and digital payments.
Recommendations for Accelerating Digital Adoption
- Expand Affordable Internet Access
- Drive 5G expansion in rural areas.
- Subsidize low-cost smartphones and data plans.
- Improve Digital Literacy
- Scale up grassroots digital education initiatives to boost internet adoption.
- Encourage public-private partnerships to promote online skills training.
- Enhance Digital Financial Inclusion
- Strengthen consumer trust in digital payments and e-commerce.
- Expand digital banking services to rural areas and small businesses.
A Digital Economy with Untapped Potential
India’s digital economy is booming, but it risks leaving large sections of its population behind due to low internet penetration, smartphone access, and e-commerce adoption. Closing these gaps will be critical to sustaining economic growth and maximizing India’s digital potential. With targeted policies and infrastructure expansion, India can bridge this divide and fully leverage its digital transformation.
