India’s Online Retail Market to Surpass $90 Billion by 2026, Grocery Sales Lead Growth

India’s digital retail industry is on track to cross the $90 billion mark by 2026, experiencing its fastest growth rate in five years, according to a recent report from Redseer Strategy Consultants. The sector is expected to grow annually between 22 and 24 percent, primarily fueled by rising demand in everyday consumption categories such as groceries, rather than traditional drivers like mobile phones.

The report highlights that the gross merchandise value (GMV) of India’s e-commerce sector grew approximately 25 percent year-on-year in the first half of 2026, reaching around $38 billion. This marks the strongest first-half performance the market has seen in four years, reflecting robust consumer engagement in online shopping.

While overall online retail saw rapid expansion, the mobile phone segment showed no growth during the same period and is forecasted to increase by only 2 to 3 percent for the entire year. The sluggish pace is attributed to substantial price hikes that have dampened sales volumes in the mobile category. As a result, grocery sales are expected to surpass mobile phones as the second-largest category in India’s online retail market, trailing only behind fashion.

Kushal Bhatnagar, a partner at Redseer, commented on the trend, stating, "This year, India’s online retail is growing fastest where demand is steadiest." This observation reflects a shift in consumer preference toward essential goods amid economic headwinds and changing spending habits.

The report also forecasts that grocery, beauty and personal care (BPC), and home and furniture categories will collectively contribute about 40 percent of the total online retail GMV in 2026. These sectors are expected to generate around 60 percent of the incremental GMV growth during the year.

Specifically, grocery sales are predicted to grow by 50 to 53 percent in 2026, increasing their share of the online market from 16 percent in 2025 to 19 percent the following year. Meanwhile, the mobile phone category, which accounted for roughly 19 percent of online retail sales last year, is projected to see its market share shrink to about 16 percent. Growth in BPC is anticipated at 36 to 39 percent, and home and furniture sales are expected to rise by 31 to 34 percent in 2026.

The electronics segment showed a notable rebound of 22 percent growth in the first half of 2026 after contracting 5 percent during the same period in 2025. Redseer attributes this increase to several factors, including a reduction in the goods and services tax (GST) on large appliances from 28 percent to 18 percent in September 2025, aggressive discounts on air conditioners due to changes in the Bureau of Energy Efficiency (BEE) star ratings, and a surge in induction cooktop sales caused by an LPG shortage. Additionally, early purchases of laptops ahead of anticipated component price increases contributed to the demand spike.

Despite this rebound, growth in electronics is expected to normalize to a 12 to 15 percent range in the second half of 2026.

Looking ahead to the festive season, the 30 to 35 days leading up to Diwali are predicted to see online sales rise by about 25 percent year-on-year, reaching $15 to $16 billion. This would represent the strongest festive growth in five years. The report expects sustained momentum in grocery, BPC, home and furniture, and general merchandise categories during this period, with projected growth rates of 48 to 50 percent for grocery, 35 to 40 percent for BPC, and 32 to 35 percent for home and furniture. In contrast, mobile sales are forecasted to grow modestly at 5 to 7 percent.

Redseer also notes that mobiles and electronics combined will constitute less than half of festive GMV for the first time, dropping from 51 percent to around 46 percent. The decline is linked to rising prices that are expected to keep sales volumes subdued.

India’s online retail market continues to evolve as consumer preferences shift from high-ticket electronics to essential goods and lifestyle products. This transition reflects broader economic trends and the increasing penetration of e-commerce in everyday life. With more categories expanding rapidly, the sector presents diverse opportunities for retailers and brands aiming to capture emerging demand patterns.