E-commerce exports in  India set to double in 2025

India's e-commerce exports currently total a modest $3-5 billion annually, significantly lower than China's impressive $350 billion export volume. This stark difference highlights the massive growth potential in India's digital export landscape.

Given this, you'll be interested to know that the Indian e-commerce market is set to grow from $123 billion in 2024 to $292.3 billion by 2028. In fact, the first dedicated e-commerce export hub is scheduled to start operations in March 2025, marking a significant milestone in India's digital trade journey.

This comprehensive guide explores the factors driving this growth, emerging opportunities across different sectors, and how you can navigate the evolving landscape of India's e-commerce exports.

The current state of India's e-commerce exports

The current landscape of e-commerce exports in India shows promising growth potential. E-commerce exports range between $4-5 billion in FY2023, contributing approximately 0.9% to 1.1% of India's total merchandise exports.

Key statistics and market size

The e-commerce sector achieved $14 billion in Gross Merchandise Value during the 2024 festive season, marking a 12% growth from the previous year. Moreover, the market is projected to expand from $123 billion in 2024 to $300 billion by 2030.

Major export destinations

Gujarat leads India's export contributions with $127 billion in FY22. Maharashtra follows with exports worth $32 billion in 2022-23, while Tamil Nadu recorded $35 billion in 2021-22. Additionally, states like West Bengal ($13.3 billion) and Uttar Pradesh ($9.5 billion) demonstrate strong export performance.

Top-performing product categories

The furniture category experienced over 20% year-over-year sales growth in 2022. Furthermore, the Indian toy industry saw an impressive 239% increase in exports compared to FY 2014-15.

Key export categories showing substantial growth include:

• Beauty products ($2.7 billion export value with 25% YoY growth)
• Kitchen products (35% YoY growth)
• Luggage and accessories (20% YoY growth)
• Textiles and handloom products

Notably, over 125,000 registered exporters from 28 states and 7 union territories participate in cross-border e-commerce through platforms like Amazon Global Selling. Smaller cities are also making their mark - exporters from Haridwar achieved $23 million in sales, while Sri Ganganagar surpassed $13 million in 2022.

Growth drivers fueling 2025 predictions

Substantial investments in digital infrastructure are propelling India's e-commerce export potential. The country's exports of digitally delivered services soared from INR 2531.41 billion in 2005 to INR 21685.78 billion in 2023. Consequently, the continuous development of data centers and high-speed internet connectivity has created a robust foundation for cross-border trade.

Digital infrastructure improvements

The expansion of 4G networks has enhanced internet connectivity across urban and rural areas. Subsequently, the number of internet connections reached 895 million by June 2023. The ongoing rollout of 5G networks, primarily supported by government fibre network investments, promises to enhance network performance and support advanced applications.

Government policy support

India's Foreign Trade Policy 2023 has established a clear framework for supporting cross-border e-commerce exports. The policy focuses on empowering:

• Artisans and weavers
• Craftsmen and MSMEs
• Small-scale exporters

Particularly noteworthy is the extension of the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme to courier and postal exports. The Department of Post is expanding India's postal export network through Dak Niryat Kendras, essentially creating a hub-and-spoke model.

Rising global demand for Indian products

Global cross-border e-commerce is expected to reach USD 800 billion by 2025. The sector presents unique advantages for Indian exporters, including:

Direct-to-consumer sales opportunities that offer better profit margins. According to recent data, India's e-commerce market is projected to grow from USINR 10378.80 billion in 2024 to USINR 24664.41 billion by 2028. The expansion is accelerated by tier-2 and tier-3 cities, where online retail markets show remarkable growth potential.

The government's open e-commerce network ONDC has expanded into 236 cities, onboarding over 36,000 merchants. This expansion, coupled with the Government e-Marketplace (GeM) platform's success - which doubled its Gross Merchandise Value in FY24 to cross USINR 4046.89 billion - demonstrates the growing infrastructure for digital trade.

Technology enabling export growth

Advanced technology platforms are reshaping India's e-commerce export landscape. Between April and June 2024, the UPI system processed over Rs. 44 lakh crore in transactions, demonstrating the robust digital payment infrastructure supporting cross-border trade.

Digital payment solutions

The widespread adoption of digital wallets and international payment gateways has simplified global transactions for exporters. Specifically, these solutions offer secured transactions with higher success rates. Online payment modes provide immediate fund transfers, making international shipping transactions more efficient.

Logistics optimization platforms

Smart logistics platforms now offer end-to-end management solutions integrated with existing ERP systems. These platforms provide:

• Real-time shipment tracking
• Automated route planning
• Smart order clubbing
• Intelligent driver assignment
• Dynamic delivery optimization

Blockchain technology currently creates trusted environments for supply chain stakeholders. Simultaneously, AI-powered analytics help prevent cargo theft and optimize parking management.

Cross-border e-commerce tools

The integration of IoT brings unprecedented efficiency to shipping and supply chain management. These tools primarily offer real-time monitoring and tracking capabilities. Cross-border logistics services now include specialized forwarding platforms that connect with major marketplaces through open APIs.

Advanced logistics management solutions automate various aspects of international trade. These platforms handle customs documentation, reduce return costs through batch processing, and provide real-time visibility across bulk shipments.

The latest AI and large language models are streamlining core aspects of e-commerce operations. These technologies assist in:

• Creating product listings
• Managing customer reviews
• Handling multiple marketplace complexities

Tech giants evidently recognize this potential, as demonstrated by their combined advertising revenue of over Rs. 60,000 crore in FY24. The seamless integration of these technological solutions positions Indian exporters to compete effectively in global markets.

Sector-specific opportunities

Three key sectors stand out in India's expanding e-commerce export landscape. Each sector offers unique opportunities and growth potential.

Fashion and textiles

The textile market, currently valued at USINR 14682.20 billion, aims to reach USINR 29533.16 billion by 2030. Above all, India's apparel exports jumped 35.06% in October, reaching USINR 103.79 billion. The sector directly employs over 45 million people and creates 100 million additional jobs in related industries.

Key markets for textile exports include:

• The US and EU (70% market share)
• Korea (emerging market with favorable duty structure)
• Brazil (key Latin American destination)
• Middle East and North East Asia

Electronics and technology

In light of recent developments, electronics exports from India reached USINR 1913.75 billion in FY23. The sector contributes 3.4% to India's GDP. It is important to realize that India has become the second-largest mobile phone manufacturing country globally, with production surging 21 times over the last decade.

The electronics manufacturing industry projects growth from USINR 6328.53 billion to USINR 25314.14 billion by 2025-26. Tamil Nadu led in electronics exports, with INR 806.68 billion in FY24, representing 32.84% of national exports.

Handicrafts and artisanal products

The handicrafts market was worth USINR 360937.38 million in 2023 and is expected to reach USINR 659669.49 million by 2032. The sector employs more than seven million people, with female artisans dominating at 56%.

The USA remains the top importer of Indian handicrafts, claiming 37% of total exports. The UK and UAE follow as major buyers, with the UK focusing on art items and crocheted goods, and the UAE preferring handprinted textiles and art metalware.

The government anticipates investing USINR 10125.65 million in the handloom and handicraft sector within the next four to five years. To support this growth, 744 handicraft clusters currently operate across India, employing 212,000 artisans and offering over 35,000 products.

Overcoming export challenges

Recent policy changes and infrastructure developments are addressing key hurdles in India's e-commerce export sector. The Reserve Bank of India has simplified export procedures for shipments up to INR 84,380.45, primarily benefiting small exporters.

Streamlining returns and logistics

The establishment of e-commerce export hubs near Delhi airport marks a significant advancement in logistics optimization. These hubs offer expedited customs clearance and simplified return processes. Five companies, including DHL and Lexship, are currently seeking approval to establish additional export hubs.

The hubs provide crucial facilities:

• In-house customs and security clearance
• Streamlined return processing
• Integrated warehousing solutions
• Expedited documentation handling

Simplifying compliance requirements

The government has introduced measures to reduce documentation burdens for MSMEs. Hence, banks no longer require costly reconciliation for transactions under INR 84,380.45. This streamlined process remains valid until March 31, 2025.

Despite these improvements, MSMEs face challenges with documentation and compliance costs. Therefore, a potential solution involves allowing e-commerce platforms to hold inventory for MSMEs, enabling innovative models for product ownership transfer.

Improving payment infrastructure

Banking issues present significant hurdles for e-commerce exporters. The current EDPMS fee structure charges between INR 1,500 and 2,000 per shipping bill, creating a substantial burden for small-value exporters.

The RBI's draft FEMA regulation 2024 proposes giving Authorized Dealer banks the power to approve variations beyond the 25% threshold. Nevertheless, questions remain about banks' expertise in implementing these changes effectively.

Cross-border payment innovations are tackling multiple challenges:

• High transaction costs
• Delayed settlements
• Complex compliance requirements

Fintech solutions are introducing real-time settlements and cost-effective currency conversions. Yet, the 25% limit on differences between received amounts and declared values in shipping bills continues to affect exporters. This cap fails to account for platform fees, unsold stock costs, and price variations.

Key aspects

Manufacturing firms adopting e-commerce platforms are 21.8% more likely to become exporters. This data underscores the transformative impact of digital platforms on India's export capabilities.

Research covering 2,191 manufacturing firms reveals a 7.9% increase in export intensity through e-commerce adoption. Primarily, this growth stems from reduced costs in:

• Market entry and sustainability
• Information gathering and distribution
• Customer relationship management
• Inventory management
• Product customization

Overall, e-commerce platforms minimize several traditional export barriers. The ability to handle asynchronous communication proves especially valuable when dealing with different time zones. Online stores generally benefit from centralized inventories, which reduce operational costs markedly compared to store-by-store management.

The Foreign Trade Policy 2023 aims to boost merchandise exports to USD 1 Trillion by 2030, targeting a compound annual growth rate of 12.2%. Currently, global cross-border e-commerce is projected to reach USD 800 Billion by 2025 and expand to USD 2 Trillion by 2030.

Presently, the Department of Post is expanding India's postal export network through a hub-and-spoke model, linking Dak Niryat Kendras to foreign post offices. This infrastructure development undoubtedly supports smaller exporters entering global markets.

The e-commerce industry demonstrated remarkable resilience in fiscal year 2023, recording a 26.2% jump in order volumes. Overall, tier-3 cities' share in the e-commerce market grew from 34.2% in 2021 to 41.5% in 2022.

The establishment of E-Commerce Export Hubs (ECEHs) near airports marks a strategic move toward streamlined exports. These hubs integrate various stakeholders within a unified regulatory framework and offer storage, packaging, labeling, certification, and testing facilities.

Looking ahead, India's manufacturing exports are predicted to exceed INR 84.38 trillion by 2028. The manufacturing sector's contribution to India's GDP is expected to rise from 15.6% to 21% by 2031, potentially tripling the country's export market share.

Disclaimer: This guide provides predictions and analysis based on current market trends and expert opinions. Future outcomes may vary due to unforeseen economic, political, or technological changes. Consult with financial and industry professionals before making investment decisions.

Contributed by Denila Lobo

Denila is a content writer at Winvesta. She crafts clear, concise content on international payments, helping freelancers and businesses easily navigate global financial solutions.