By 2022, the sector is expected to be worth USD 71.94 billion.
Indian retail e-commerce sales will climb about 31 percent to USD 32.7 billion in 2018, according to a report by marketing research firm eMarketer.
With this number, India's e-commerce growth will be behind only China and Indonesia in the Asia-Pacific region, the report said.
About 25.3 percent, or one-fourth, of India's population will be online shoppers by this year, eMarketers forecasts. This figure will jump to about 41.6 percent by 2022.
The value of India's e-commerce will be about USD 71.94 billion, the report added.
Investment by e-commerce companies, and increasing usage of the internet and smartphones have contributed to this growth.
"Ecommerce is booming in India thanks to increased internet users and cheaper smartphones," said Eric Haggstrom, forecasting analyst at eMarketer in the report.
Despite the massive growth, e-commerce sales will make up only 2.9 percent of total retail sales in 2018, the report said. This number is low when compared to more developed markets.
"In tandem with this shift to online and mobile usage, Flipkart, Amazon and Paytm Mall have been competing fiercely to claim their share of the Indian market. All three of these companies are making large investments, which include improved logistics and payment systems, as well as offering deep discounts, which will fuel future growth in the market." Haggstrom added.
India's rapidly growing e-commerce market has attracted not just domestic investment, but also investment from foreign investors.
US-based retail giant recently announced that it is purchasing a 77 percent stake in Flipkart for USD 16 billion.Chinese online retailer Alibaba has made investments in mobile wallet company Paytm and online grocer BigBasket.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.