Consumers in India will spend $32.7 billion shopping online this year, a 31 percent increase on last year's figure, according to eMarketer.
Sales will be driven by ecommerce leaders Amazon, Paytm and Flipkart, which are all expanding into new sectors including grocery, the research firm said. Flipkart, which has 100 million users, is set to be bought by Walmart in a deal valued at $16 billion, it was announced last month.
However, online shopping only represents a fraction of total retail spending in the country: while 25 percent of the population is forecast to shop online this year, ecommerce will make up just 2.9 percent of overall retail sales.
More money is set to be spent online in the next three years, however, with eMarketer predicting that Indians will spend $71.94 billion on ecommerce by 2021.
"Ecommerce is booming in India thanks to increased internet users and cheaper smartphones," said Eric Haggstrom, forecasting analyst at eMarketer.
"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.
Own-label brands are also booming in the country, with Flipkart launching Billions last year and AmazonBasics selling everything from headphones to stationery.
- CNBC's Ryan Browne contributed to this report.