India’s e-commerce sector is undergoing a profound transformation, with Tier-2 and Tier-3 cities emerging as the primary engines of growth. A new report by Anarock Property Consultants reveals that by 2030, smaller towns are expected to command 65% of the country’s total online shopping activity, almost double the share projected for Tier-1 cities, which will stand at 36%.
This marks a significant shift from recent years when urban hubs dominated the e-commerce landscape. Until the end of FY2024, Tier-1 cities still accounted for the majority of online shoppers. However, factors such as rising disposable income, widespread internet access, and the affordability of smartphones have driven a wave of digital adoption in India’s hinterlands.
The number of online shoppers has seen a sharp increase, growing from 140 million in 2020 to around 260 million in 2024. According to the report, this figure is expected to rise to 300 million by 2030 and surge to an estimated 700 million by 2035.
In parallel with the digital boom, India’s physical retail landscape is also expanding. New mall construction is picking up pace, particularly in major metropolitan areas. Anarock projects that more than 16.6 million square feet of Grade A retail space will be added across the top seven cities—Delhi-NCR, Mumbai, Bengaluru, Pune, Hyderabad, Chennai, and Kolkata—between 2025 and 2026. Delhi-NCR and Hyderabad are set to receive the majority of this new supply, together accounting for approximately 65% of the total.
Despite concerns of potential oversupply, Anarock CEO and Managing Director Anuj Kejriwal expressed confidence, citing favourable absorption trends. He noted that retail leasing has consistently outpaced new supply in recent years. For instance, in 2022, 3.2 million square feet were leased against 2.6 million square feet of new supply. Similarly, 2023 saw 6.5 million square feet leased, exceeding the 5.3 million square feet added to the market.
Looking ahead, over 12.6 million square feet of retail space is expected to be leased across the top cities over the next two years. This robust demand is being fueled in part by a steady influx of international brands entering the Indian market. In the last four years, more than 60 global retailers across segments such as fashion, electronics, lifestyle, and food & beverage have set up shop in India.
“The arrival of global players has heightened demand for premium retail environments, especially in high-traffic areas like malls and major high streets,” Kejriwal said. India’s e-commerce industry is forecast to reach a market size of $550 billion by 2035, underscoring the dual growth of both digital and physical retail infrastructure.