India’s digital economy is rapidly reshaping its global role, set to contribute 20% of GDP by 2030 surpassing traditional sectors, driven by cloud, AI, payments, and digital infrastructure, writes Piyush Somani, Founder, CMD & CEO of ESDS Software Solution Ltd.
India stands at a critical inflection point in its economic and technological evolution. Over the past decade, digital transformation has shifted the country from being primarily a global IT services provider to a diverse, cutting-edge technology powerhouse. The accelerating digital economy fuels growth, drives innovation, creates jobs across sectors, and promises to redefine India’s role in the global economy.
Explosive Growth in India’s Digital Economy
National income in 2022-23 which translates into nearly $402 billion USD (INR 31.64 lakh crore) in Gross Domestic Product (GDP), said the report, the State of India’s Digital Economy Report 2025 by the Indian Council for Research on International Economic Relations (ICRIER). This figure is expected to rise to 13.42% by 2024-25 and projected to reach 20% of India’s GDP by 2029-30, surpassing sectors like agriculture and manufacturing in economic share. This robust growth has been fuelled by the rapid adoption of cloud computing, AI-driven applications, digital payments, and the expansion of digital infrastructure such as high-speed internet and mobile access. [The digital economy is also becoming a major employment engine, providing jobs to 14.67 million workers in 2022-23, or 2.55% of the total workforce. Remarkably, the productivity in the digital sector is five times higher than the traditional economy, delivering outsized value per worker.
Digital Diffusion Across Traditional and Emerging Sectors
Through sectors like ICT that have been traditional vanguards of the digital economy in India, we are seeing a strong wave of digitalization among non-digital native industries such as banking and finance services (BFSI), retail education or healthcare. These digitally enabling industries, such as telecommunication and IT services or electronic components manufacturing contributed a 7.83% of GVA; digital platforms and intermediaries (mainly e-commerce) added 2%. Digitalization in BFSI, trade and education etc accounted for 2% of GVA from the conventional sectors that displayed how all pervasive it is as any type economic activity was getting transformed into digital mode thereby impacting GDP.
Growth in digital platforms is expected to increase even further, with forecasts showing annual growth rates of nearly 30% per year for digital intermediaries. The evolution of digital infrastructure and services, with the aid of government initiatives like Digital India (which offers Aadhar e-KYC, Unified Payments Interface – UPI, village broadband internet expansion) contributed significantly to this shift.
The Growing Digital User Base and Mobile Connectivity
India’s ascent as a digital economy is underscored by its massive, young, and increasingly tech-savvy population. [Internet penetration now covers 692 million users, making India the world’s largest usage This expansive connectivity fuels not only e-commerce but also digital entertainment, education, and financial services.
Digital payment platforms, especially Unified Payments Interface, have revolutionized transactions in India with 38 billion transactions worth INR 71.95 trillion in 2021 alone. This digital payment adoption has significantly contributed to financial inclusion, allowing millions of previously unbanked individuals to participate in the formal economy.
India’s IT Industry and Emerging Technology Frontiers
The traditional IT services sector remains a backbone, with revenues projected to reach $282.6 billion in 2025, growing steadily at about 5.1% annually according to a NASSCOM report. Critical verticals such as BFSI, healthcare, and automotive continue to lead innovation cycles. However, more transformative growth is coming from emerging technology frontiers: artificial intelligence (AI), blockchain, 5G adoption, and cloud computing. AI adoption is accelerating rapidly, with 75% of enterprises expected to embed AI technologies into operations by 2025.
This includes AI-driven analytics, chatbots for customer interaction, and automation in manufacturing and logistics. Blockchain markets in India are forecasted to grow, while 5G networks are anticipated to add economic value, empowering smart cities, IoT deployments, and autonomous systems. As per a study by EY India also hosts 55% of the world’s Global Capability Centers (GCCs)—offshore centers by multinational corporations that drive innovation, research, and business services. This concentration allows India to play a central role in global technology value chains amid increasing localization trends.
Challenges to Sustain Growth and Innovation
However, for all of that progress, there are still serious challenges facing India’s digital economy. PC digital spending continues to be below global peers, suggesting scope to further increase digital adoption as well as user activity. Cybersecurity risks are ramping up with digital growth so investments in talent and cyber resilience are needed. There seems to be a short fall in required professionals particularly in AI, cybersecurity and the cloud, and this bottleneck needs to be addressed immediately through reskilling and education programs.
Regulatory clarity is improving through measures like the Digital Personal Data Protection Rules of 2025, which aim to balance innovation with privacy protections and foster trust among users and businesses. Continued enhancements in infrastructure, clear policy frameworks, and investment in next-generation technologies will be essential enablers.
Looking to the Future
India’s audacious digital goals and burgeoning tech ecosystem prime it as a market ready to lead global growth in digital economy by 2030. From farmers in rural villages who can check commodity prices on a mobile app to large companies with AI-infused operations centers, the digital is quickly weaving through the country’s social and economic fabric.
Targeted investments in data centers, cloud infrastructure, AI (artificial intelligence) research and digital skills development, will unlock huge opportunity. CIOs, IT executives, and policymakers must be indefatigably focused on resilience, inclusivity, and innovation.