The Indian Council for Research on International Economic Relations (ICRIER)’s Prosus Centre for Internet and Digital Economy (CIDE) recently released the  third edition of the ‘State of India’s Digital Economy 2025 report.

About Digital Economy

• The Digital Economy refers to economic activities driven by digital technologies, internet connectivity, and data-based services.
• Key Components of the Digital Economy: Digital Infrastructure, E-Commerce & Online Services, Fintech & Digital Payments, Software & IT Services, etc.

Key Highlights of the ICRIER-CIDE Report

• India’s Overall Digital Ranking: Based on the CHIPS framework, India is the third-largest overall economy, the 28th largest digital user economy, and ranks eighth in an overall combination of these two ranking systems
• Mismatch Between Internet Connectivity and User Spending: Although India’s density of internet connectivity is comparable with other countries, its user spending on digital services is lower than expected, indicating a gap in affordability and access.

• Rapid Growth of the Digital Economy: India’s digital economy is growing at twice the rate of its overall economy and is projected to become one-fifth of the economy by 2029.
• Strength in Digital Harnessing: Indian firms and users rank well in harnessing digital technology, with high ICT services exports and the third-highest market capitalisation of its IT sector, following U.S. and China.
• Regional Digital Divide: Southern and Western States are far more advanced in digitalisation than the Eastern and Northern States, indicating the need for targeted policy interventions.
• Weaknesses in Emerging Technologies
• • While India shows strength in decentralised finance, a strong start-up culture, and high valuations for unicorns.
  • India lags in relative adoption of Consumer IoT and metaverse, with scores much below the median score for G32 countries.
  • India also scores poorly in AI infrastructure and slightly below the median in AI research, highlighting the need for improvements in advanced technologies.