India’s digital ecosystem moved into a more mature and layered phase in 2025, shifting from the early momentum of 5G-driven adoption to deeper integration of intelligence, platforms and connected experiences across daily life. While smartphones and digital payments continued to scale new highs, the year also saw meaningful traction across smart living solutions, over-the-top (OTT) platforms, cloud gaming, embedded connectivity and programmable telecom networks. At the same time, emerging services such as AirFiber, connected home ecosystems and application programming interface (API)-led telecom platforms began reshaping how connectivity is delivered.
A look at the key developments across various market segments during 2025…
Smart wearables
The Indian wearables market saw a slowdown in 2025, led by a decline in smartwatch shipments. According to an industry report, smartwatch shipments in India declined 27 per cent year-on-year in the second quarter (Q2) of 2025, marking the fifth consecutive quarter of contraction. A quieter launch calendar and cautious consumer demand shaped the market in 2025, with brands leaning on discounts and promotions to sustain volumes instead of rolling out large numbers of new models.
In contrast, some emerging categories showed stronger momentum. Smart glasses stood out in Q2 2025, with shipments jumping from roughly 4,000 units a year earlier to around 50,000 units, translating into a year-on-year growth of nearly 12 times. Further, smart rings, after recording their first-ever decline in Q1 2025, rebounded modestly in Q2, registering a year-on-year growth of about 2.8 per cent.
Beyond demand-side factors, structural challenges continued to shape the market. Design remained a key constraint, as wearables are worn as personal accessories but often prioritise smartphone-grade components over form factor and aesthetics, resulting in bulkier devices. Data accuracy was another concern, particularly for health metrics, as sensor performance can vary due to placement, hardware limitations and user behaviour. Most consumer wearables still lack clinical validation, limiting their credibility for medical or preventive health use cases. Data security also remained a pressing issue, with wearables collecting large volumes of sensitive personal data that is frequently stored in the cloud or shared across digital ecosystems.
Smart living
India’s smart home market showed clear signs of scale and segmentation. Industry estimates placed the market at about $5.2 billion during the year, with projections indicating growth to $19.31 billion by 2030, implying a compound annual growth rate (CAGR) of roughly 30 per cent. Within this expanding landscape, smart TVs continued to anchor household adoption. The Indian smart TV market is projected to grow at a CAGR of 16.32 per cent between 2025 and 2033, driven by rapid digitisation, changing viewing behaviour, the expansion of OTT platforms, improving internet connectivity and the availability of affordable devices. Alongside entertainment-led adoption, security-focused devices emerged as a smaller but increasingly material segment. Industry reports suggest that India’s smart home security market could generate revenues of around $3.56 billion by 2030. In the appliances category, interest continued to build around connected versions of air conditioners, washing machines, water purifiers and kitchen appliances, reflecting gradual movement beyond point solutions towards more integrated home ecosystems.
Furthermore, product innovation during the year also moved beyond basic functionality. Industry coverage highlighted the introduction of plug-and-play immersive lighting solutions in India that synchronise with on-screen content. At the ecosystem level, platform providers increasingly emphasised voice control, artificial intelligence (AI)-enabled features and matter compatibility as key differentiators in their smart-home offerings.
Retail and go-to-market strategies evolved in parallel. Brands and retailers placed greater emphasis on experience-led physical formats, including brand showrooms, dedicated smart-lighting hubs and enhanced in-store demonstrations designed to showcase integrated lighting, security and automation solutions. The year also saw greater localisation of smart-home manufacturing, alongside the roll-out of more affordable connected appliance portfolios designed specifically for the Indian market.
Handsets
India’s smartphone market reached a five-year high during the festive third quarter of 2025, with shipments rising 4.3 per cent year on year to 48 million units, according to an industry report. Growth was driven by steady demand for premium smartphones, including both new launches and older models.
The festive quarter was supported by multiple demand stimulators across channels. Aggressive pricing strategies, deep discounting, flexible payment options, trade-in and upgrade programmes, along with promotional offers such as cashbacks and bank-led deals, played a key role in driving volumes across both online and offline retail. Improved consumer sentiment, wider access to retail financing and well-timed product refresh cycles further reinforced momentum during the peak sales period.
One of the most visible shifts in 2025 was the mainstreaming of generative and on-device AI capabilities across the Indian smartphone market, extending beyond flagship models into the mid-range. Several launches during the year incorporated AI tools such as circle to search, real-time on-device voice assistants and contextual system intelligence that reduced reliance on cloud connectivity. AI-driven photography also emerged as a key differentiator. Advanced on-device image processing features, including object removal, semantic enhancements and automated photo optimisation, were widely highlighted across 2025 launches. Performance-focused features gained attention as well, particularly among younger users and mobile gamers. Several mid-tier devices introduced enhanced thermal management solutions, including active cooling mechanisms such as built-in fans, to sustain performance during prolonged gaming and heavy usage.
Digital payments
India’s payments system became more settled and widespread in the first half (H1) of 2025. As per data from the Reserve Bank of India, digital modes accounted for 99.8 per cent of total payment transaction volumes and 97.7 per cent of total transaction value. During H1 2025, overall payment transactions stood at Rs 1,572 trillion, of which Rs 1,536 trillion were processed through digital channels. The Unified Payments Interface (UPI) remained the most widely used payment method. It made up 85 per cent of the total transaction volumes during the period, showing how heavily it is used for daily payments. However, its share in transaction value was only 9 per cent, as most UPI payments are small-ticket and high-frequency in nature. Meanwhile, high-value transactions continued to be dominated by the real-time gross settlement (RTGS) system. While RTGS accounted for only 0.1 per cent of the total transaction volumes, it contributed 69 per cent of the total transaction value. In H1 2025, RTGS processed 161 million transactions, with a total value of Rs 1,079.2 trillion.
Within the UPI ecosystem, 2025 saw a shift from only adding more transactions to improving usage through new features. Products such as UPI Lite and Autopay helped make small-value and recurring payments easier and smoother for users. Merchant adoption also increased in Tier III and IV cities, supported by low-cost payment infrastructure and simpler onboarding processes. At the same time, cards continued to be used for higher-value purchases and EMI-based spending, especially for discretionary items.
On the merchant side, innovation became more visible during the year. Some merchants introduced AI-enabled sound box devices that go beyond payment confirmation and allow small and medium businesses to check collection summaries and trends using voice-based queries. Consumer behaviour also changed as transaction volumes increased and awareness around fraud grew. Many users adopted a safety-first approach by keeping a separate bank account for regular digital payments. This helped limit risk exposure and made it easier to manage everyday spending.
Digital gaming
India’s digital gaming sector entered 2025 as a fast-growing market, and industry estimates suggest the market could grow to $4.3 billion by 2029-30. This growth is being driven by a more mature gaming audience that is willing to spend money on better quality and more engaging games.
A major change under way is in how gaming companies generate revenue. In-app purchases became the main source of revenue, estimated to account for about 44 per cent of the total gaming revenue, while advertising made up the remaining 56 per cent. By 2029-30, in-app purchases are expected to overtake advertising and contribute nearly 66 per cent to the total sector revenue. This shift has been supported by easier payment options, especially UPI-based micro-payments, which have made small and frequent purchases simpler and reduced drop-offs during checkout.
However, it was a difficult year for real-money gaming. The segment began the year as a $3 billion industry, catering to a large user base. This changed sharply in August 2025, when Parliament passed the Promotion and Regulation of Online Gaming Act. The law banned online games played for money, along with related advertising and payment transactions. The government described the move as a step to protect consumers from financial and social risks, while continuing to allow and regulate non-monetised digital games. The impact was immediate, with shutdowns of several platforms, widespread job losses, and a sharp decline in investor confidence across the gaming start-up ecosystem.
At the same time, India’s cloud gaming market is expected to grow steadily over the coming years. Supported by wider 5G coverage, better broadband access and a gaming population of over 600 million, the segment is projected to expand to more than Rs 10 billion by 2030.
eSIMs
India’s embedded SIM (eSIM) market moved beyond the early adoption stage and showed steady progress during the year. Industry estimates suggested that the market is projected to grow at a CAGR of 15.83 per cent during the period 2025-33 to $1,459.82 million. While smartphones continued to be the main source of awareness, eSIM usage expanded into wearables, laptops, tablets, internet of things (IoT) modules and the automotive segment.
On the operator side, both public sector and private telecom players focused on phased roll-outs to increase availability instead of pushing for immediate mass adoption. Telecom operators encouraged users to migrate from physical SIMs to eSIMs. To this end, Tata Communications partnered with Bharat Sanchar Nigam Limited to roll out pan-Indian eSIM services.
At a global level, the move towards eSIM-only devices continued to influence the industry. The launch of eSIM-only smartphones in select international markets shaped device strategies and operator planning worldwide, including in India. However, India’s adoption remained slower. Even though device support and network readiness improved, mass-market uptake lagged global averages due to pricing concerns, uneven consumer awareness and evolving regulatory clarity. As a result, physical SIMs continued to dominate regular consumer usage.
Regulatory activity also increased in 2025. Telecom authorities began discussions on frameworks governing the sale and use of foreign SIM and eSIM profiles in machine-to-machine and IoT devices meant for export. These consultations focused on clarifying security responsibilities, licensing structures and know-your-customer requirements for embedded connectivity.
OTT
India’s OTT entertainment segment strengthened its role as a key part of the country’s media and entertainment landscape. The total OTT user base was estimated at 601.2 million users, covering around 41.1 per cent of India’s population. Airtel, Jio and Vodafone Idea continued to play a central role in OTT distribution. Streaming services were increasingly bundled with connectivity plans, making OTT access more seamless and helping platforms expand their reach across different user segments. A major development during the year was the completion of the merger between Reliance Industries’ Viacom18 and Disney’s Star India businesses, which had been announced in late 2024. The consolidation brought together television networks, streaming platforms, sports rights and digital content operations under a single large-scale media entity, creating a powerful player across content creation, distribution and data-driven monetisation in India.
Connected TV (cTV) emerged as one of the strongest growth drivers in 2025. cTV became an attractive format by combining the familiar experience of television viewing with the advantages of digital delivery. Advertisers benefited from larger screens that offered higher viewer attention and better recall, while logged-in user environments enabled more targeted advertising and improved measurement. Audience data for 2025 showed that India’s cTV user base grew by about 85 per cent during the year, reaching 129.2 million users.
VoNR
Telecom operators in India are at different stages of readiness when it comes to voice over new radio (VoNR). This is happening even as global network vendors push solutions to support a shift towards fully 5G-based voice services. For instance, Reliance Jio has taken an early lead by building its network on a standalone (SA) 5G architecture, which removes the need to fall back on 4G for voice calls. The operator has already carried out VoNR trials in select service areas to test call setup time, voice quality and network stability. This puts it in a strong position for wider commercial deployment.
Meanwhile, Airtel has focused on quickly expanding 5G coverage using a non-standalone (NSA) architecture that relies on the existing 4G core. While this has helped speed up roll-out, it limits the ability to deploy VoNR in the near term. However, the operator has indicated plans for a gradual shift to SA infrastructure. This transition would make VoNR possible over time, especially for enterprise and low-latency use cases where consistent voice quality is important.
API economy
In 2025, India’s telecom-led API economy began moving from planning to real execution. Operators started positioning their networks as programmable platforms rather than closed systems. A key development during the year was the Airtel partnership to open network APIs for developers. This enabled controlled access to capabilities linked to 5G, edge computing and AI.
This push is in line with the rapid expansion expected in India’s telecom API market. The market is projected to grow to $117,018.9 million by 2030, highlighting the scale of opportunity around API-led service delivery. Growth is being driven by a wider adoption of cloud-native architectures, continued 5G deployment, increasing enterprise digitalisation and rising demand for secure and programmable network functions.
Outlook
The year 2025 showed that India’s digital ecosystem has largely moved past the stage of basic expansion, with significant scale being achieved across connectivity, devices and digital services. Many segments began stabilising, and the focus gradually shifted towards building stronger platforms and more sustainable business models.
2026 is expected to shape up as a transition year, where growth will be driven less by adding new users and more by improving how digital services are delivered and monetised. With wider 5G coverage and growing investments in cloud and edge infrastructure, more advanced digital use cases are becoming practical at scale. At the same time, AI is increasingly being built into networks and platforms to support automation, personalisation and better service performance. Together, these trends point to the ecosystem moving from rapid expansion towards a more integrated and intelligence-led phase of growth.
Harshita Kalra
