India’s app market is booming — but global platforms are capturing most of the gains

India's mobile app sector is experiencing unprecedented growth, with in-app purchases surpassing $300 million in the first quarter alone — a remarkable 33% increase from the previous year, as reported by Sensor Tower. However, the majority of this revenue is being captured by international platforms. In the first quarter, non-gaming applications emerged as the leading force, generating over $200 million in in-app purchases. This segment witnessed a staggering 44% year-over-year increase, thereby enhancing its share of total spending. Key contributors to this growth included categories such as utilities, video streaming, and generative AI. The data illustrates a significant evolution in India’s app market, with annual in-app purchase revenue projected to rise from $520 million in 2021 to over $1 billion by 2025, aiming for $1.25 billion this year, according to Sensor Tower. Although app downloads have stabilized at around 25 billion annually, the time users spend on these apps is on the rise, indicating a deeper level of engagement and a growing willingness to invest in digital services. A notable portion of India's spending during the first quarter was directed towards global platforms, with Google One, Facebook, ChatGPT, and YouTube dominating the revenue charts. On the other hand, domestic apps found their strength in video streaming, with JioHotstar and SonyLIV performing strongly. In terms of downloads, ChatGPT, Instagram, and the Chinese app FreeReels led the pack, followed by Indian applications like Story TV, JioHotstar, and Meesho. Although the download market has matured, monetization is gaining traction as user engagement deepens and digital payment practices become more ingrained, according to Donny Kristianto, principal market insights manager at Sensor Tower. Despite the robust growth, India's market remains relatively low in spending, generating approximately $0.03 in revenue per download compared to over $0.20 in Southeast Asia and Latin America. While newer app categories are contributing to growth, spending remains heavily concentrated in established segments like productivity, social media, and video streaming, which continue to dominate the revenue rankings. Video streaming apps alone account for about half of the top ten revenue-generating applications, highlighting their significant monetization potential. Furthermore, the demand for generative AI applications is on the rise, with downloads increasing by 69% year-over-year, and ChatGPT ranking among the top apps in both installs and revenue. India has consistently been ChatGPT's largest user base, and other AI applications are also gaining popularity. Additionally, short drama platforms are witnessing explosive growth, with downloads surging over 400%, led by apps such as FreeReels. This trend indicates that India's app market is still in the early stages of monetization, even as new categories expand users' willingness to pay.