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The digital transformation of India has gone beyond the simple incorporation of smartphones, mobile software applications, and electronic transaction systems. It has now become an essential element of the national economic framework, significantly influencing revenue generation, enhancing productivity, and fostering long-term economic growth prospects. A recent study, supported by government initiatives and carried out by the Indian Council for Research on International Economic Relations (ICRIER) for the Ministry of Electronics and Information Technology (MeitY), provides the most comprehensive assessment to date concerning the scope, structure, and growth trajectory of India's digital economy, while simultaneously highlighting its increasing strategic importance for the country's economic future.1
- Why Measuring the Digital Economy is Important?
India stands out as one of the most digitally engaged economies in the world. It leads globally in digital payments, has rapidly deployed 5G networks, and boasts a swiftly growing ecosystem of startups and digital platforms. However, until recently, there was a lack of a comprehensive and dependable evaluation of how digital activities impact national income, employment, and overall economic performance.
Precise measurement of the digital economy is crucial for effective policymaking. It empowers governments to develop targeted growth and industrial strategies, aids businesses in making prudent investment choices, and facilitates meaningful comparisons with other significant economies. Without credible measurement frameworks, the magnitude and effects of digital growth may be underestimated or misinterpreted, potentially resulting in less-than-optimal policy and investment decisions.
- How the Study Measures India's Digital Economy?
The report employs internationally recognized frameworks established by the OECD and the Asian Development Bank. Rather than focusing solely on the conventional IT sector, it presents a much more comprehensive overview. This encompasses digital infrastructure such as telecommunications and IT services, major digital platforms and intermediaries, online marketplaces and fintech companies, in addition to traditional fields like banking, retail, and education that increasingly depend on digital technologies.
By integrating national accounts data with firm-level databases, employment surveys, industry reports, and original surveys conducted with Indian businesses, the study generates the most current and reliable assessment of India's digital economy.
- How Extensive is India's Digital Economy at Present?
As per the report, India's digital economy constituted 11.74 percent of the national income during the fiscal year 2022–23. In numerical terms, this translates to about ₹29 lakh crore in Gross Value Added (GVA), which is roughly USD 368 billion. When assessed in terms of GDP, the contribution of the digital economy surpassed ₹31.6 lakh crore.2
In a broader context, the digital economy is already comparable to several of India's most significant traditional sectors regarding economic output. Importantly, this contribution goes far beyond just the information technology services industry and showcases the profound and widespread integration of digital technologies across various sectors within the Indian economy.
- What Constitutes the Digital Economy?
The predominant portion still originates from what the report refers to as "digitally enabling industries." These encompass IT services, telecommunications, electronics manufacturing, cloud solutions, and associated activities. Collectively, they represent approximately two-thirds of the overall output of the digital economy.
Apart from this core, digital platforms are increasingly influential. These consist of e-commerce marketplaces, ride-hailing applications, food delivery services, social media enterprises, and digital advertising agencies. Notably, the research also includes the revenue produced by countless businesses and individuals reliant on these platforms.
Equally important is the digital evolution of conventional sectors. Banking and financial services, retail commerce, and education now produce a substantial portion of their output through digital means. Indeed, the cumulative digital contribution from these traditional sectors nearly matches that of the emerging digital platform industries.
- A High-Productivity Engine of Growth
One of the key insights from the report pertains to productivity levels. In the fiscal year 2022–23, the digital economy provided employment for approximately 14.7 million individuals, which constitutes merely 2.55% of India's total workforce. Despite this relatively modest share of employment, it contributed nearly 12% to the national income.3
This indicates that, on average, the digital economy is roughly five times more efficient than other sectors of the economy when assessed in terms of output per employee. This edge in productivity elucidates why digitalisation serves as such a formidable catalyst for economic expansion.
- How Digitalisation is Transforming Traditional Industries?
The report highlights the ways in which digital tools are revolutionizing everyday business processes. In the banking sector, over 95% of payment transactions have transitioned to digital, although some high-value services continue to operate offline. Retail businesses are increasingly adopting omni-channel strategies, integrating brick-and-mortar stores with online platforms. Educational institutions are implementing hybrid models that merge in-person instruction with online delivery.
Other industries, including hospitality and logistics, are also adopting digital systems for customer interaction, tracking, and operational efficiency. While these developments may seem gradual, together they are significantly broadening the digital economy beyond just the technology sector.
- Where is the Digital Economy Headed?
Looking forward, the study anticipates that India's digital economy will expand nearly twice as rapidly as the overall economy. By the fiscal year 2029–30, it is projected to represent almost 20% of the national income. At that juncture, the digital economy is expected to surpass both agriculture and manufacturing regarding its contribution to economic output. In concrete terms, India's digital economy is forecasted to exceed USD 1 trillion before the decade concludes. Much of this expansion will be driven not just by digital platforms and IT services but also by a more profound digital integration within conventional industries.
- What this means for Policy and Business?
The report clearly indicates that India's digital economy is no longer a peripheral segment rather it has become a fundamental component of economic growth. For policymakers, this highlights the necessity of enhancing data collection, modernizing national accounting systems, and investing in digital public infrastructure. Improved measurement will facilitate more effective policy formulation.
For businesses, the findings underscore the vast scale of opportunity. Digital tools are no longer optional enhancements; they are integral to competitiveness, productivity, and market entry. Companies that do not adapt may find themselves outpaced as digitalization permeates various sectors.
- An Essential Phase in Interpreting India's Growth Narrative
This research signifies a crucial change in the way India evaluates and understands its economic growth. By providing credible and methodologically rigorous estimates of digital activity, it elevates the conversation beyond mere anecdotal evidence and sensational headlines. The results highlight a definitive conclusion: India's digital economy is already considerable in magnitude, demonstrates high productivity levels, and is set to become one of the key contributors to national wealth in the coming years.
Footnotes
1. Mishra, D., Kedia, M., Reddy, A., Fernandez, C., Shukla, S., Ramnath, K., Vanguri, S., Indian Council for Research on International Economic Relations, & Ministry of Electronics and Information Technology (2025). Estimation and measurement of India's digital economy. Indian Council for Research on International Economic Relations (ICRIER). https://www.meity.gov.in/writereaddata/files/Report_Estimation_Measurement.pdf
2. Mishra, D., Kedia, M., Reddy, A., Fernandez, C., Shukla, S., Ramnath, K., Vanguri, S., Indian Council for Research on International Economic Relations, & Ministry of Electronics and Information Technology (2025). Estimation and measurement of India's digital economy. Indian Council for Research on International Economic Relations (ICRIER). https://www.meity.gov.in/writereaddata/files/Report_Estimation_Measurement.pdf
3. Mishra, D., Kedia, M., Reddy, A., Fernandez, C., Shukla, S., Ramnath, K., Vanguri, S., Indian Council for Research on International Economic Relations, & Ministry of Electronics and Information Technology (2025). Estimation and measurement of India's digital economy. Indian Council for Research on International Economic Relations (ICRIER). https://www.meity.gov.in/writereaddata/files/Report_Estimation_Measurement.pdf
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