India's online retail market to exceed $90 billion in 2026
What's the story
India's online retail market is set to witness a major boom, with projections estimating it will exceed $90 billion by 2026. The growth is expected to be driven mainly by categories such as groceries, beauty and personal care (BPC), and home and furniture products. According to a report from Redseer Strategy Consultants, the market is likely to grow at an annual rate of 22-24%, making it the fastest-growing period in five years.
Market dynamics
Shift in consumer demand
The report highlights a shift in consumer demand toward everyday consumption categories. This comes even as mobile phone sales continue to be sluggish.
Grocery is expected to surpass mobiles and become the second-largest category in online retail after fashion.
India's e-commerce gross merchandise value (GMV) grew by nearly 25% year-on-year to nearly $38 billion in H1 2026, marking the strongest first-half performance in four years.
Sector analysis
Grocery set to surpass mobiles
The grocery sector is expected to grow by 50-53% over the full year, increasing its share of online retail GMV from 16% in 2025 to 19% in 2026.
This category alone is expected to contribute nearly a third of the additional GMV generated this year.
In contrast, mobile phone sales witnessed zero growth in H1 2026, with steep price increases weighing on sales volumes.
Growth drivers
Growth in other categories
Non-electronics categories such as groceries, BPC, and home and furniture products are expected to drive about 40% of total online retail GMV in 2026.
They will also contribute roughly three-fifths of the incremental GMV added during the year.
The BPC sector is projected to grow by 36-39%, while home and furniture products are expected to see a growth rate of 31-34%.
Sales recovery
Rebound in electronics sales
Electronics sales rebounded by 22% year-on-year in H1 2026, reversing a contraction of 5% during the same period last year.
The report credits this recovery to several factors including a reduction in GST on large appliances from 28% to 18% in September 2025, aggressive AC discounts after Bureau of Energy Efficiency star ratings were revised, and an LPG shortage that spurred a surge in induction cooktop sales.
Festive forecast
Strong festive-season growth expected
Online retail sales in the 30-35 days leading up to Diwali are expected to grow by about 25% year-on-year to $15-16 billion.
This would mark the strongest festive-season growth in five years, according to Redseer.
The firm expects categories such as groceries, BPC, home and furniture products, and general merchandise will continue their momentum during this period.