# India: The Ideal Market for Web3 Projects

With a population of 1.4 billion (median age of 28), 9.75 million developers, over 1,200 projects, and $3 billion in investment, India stands as the optimal market for the Web3 ecosystem.

## Regulatory Confusion: The Major Obstacle

Government regulatory confusion, including a flat tax rate of 30%, a 1% withholding tax, the absence of a dedicated regulatory body, and complex jurisdictional issues, remains the most significant impediment to market growth.

## A Step-by-Step Strategic Approach Needed

A phased market entry strategy is essential, including: Web3-friendly user onboarding (local language support, local marketing) → targeting builders (collaborating with local investors) → expanding partnerships with the government and enterprises.

## Why You Should Know About the Indian Market

New projects in the Web3 market continually emerge, with a primary focus on ‘numbers’ – users, builders, and investors in the ecosystem. Achieving meaningful numbers is crucial, and Asia, especially India, is at the forefront.

**Reasons India is a Core Market for Web3:**
1. **Young Demographics**: With a median age of around 28, younger than Indonesia (30) and Vietnam (32), the Indian population is enthusiastic and quick to adopt new technologies.
2. **Massive Population**: India, with over 1.4 billion people, has only 8% of its population currently owning cryptocurrency, indicating vast potential for Web3 technology expansion.
3. **Tech Savvy Workforce**: India boasts excellent technical colleges and approximately 9.75 million developers, having already demonstrated superb capabilities through successful projects like Polygon.

While India is an ideal region to generate the crucial ‘numbers’, it is wise to approach the market with a thorough understanding provided by reports such as those from Hashed Emergent, a Web3 venture capital firm specializing in emerging markets.

## Insights from Hashed Emergent

### Web3 Ecosystem

India has built a broad Web3 ecosystem with over 1,200 projects across various sectors. Indian Web3 startups have attracted over $3 billion in investments, doubling from $564 million in 2023 to $1.28 billion in 2024.

The infrastructure sector has led in popularity, followed by finance, whereas entertainment investments have seen a decline. Notably, Indian expatriate founders have made significant impacts in the infrastructure domain with global-level services like Eigen Layer, Sentient, and Avail.

Emerging fields like Decentralized Physical Infrastructure Networks (DePIN) and Blockchain as a Service (BaaS) are also gaining investor interest, showcasing the potential for decentralized technology applications across different industries. Key investment areas tied to AI, AI-based infrastructure, middleware, and data tools are also emerging.

Major venture capital firms like Hashed Emergent and Polygon are actively fostering and investing in the Indian Web3 ecosystem.

### Consumer and Enterprise Adoption

India’s cryptocurrency investment market showed a clear rebound from 2023. According to Chainalysis, India ranked first overall in terms of centralized exchange (CEX) and decentralized exchange (DeFi) adoption.

Retail investors’ portfolios consist of 45% stable blue-chip cryptocurrencies. However, the trading volume of memecoins has surged to five times that of other crypto assets, indicating a shift in investment preferences.

The age group of 27-40 drives token investments, with 40-year-olds displaying higher per-user investment levels, three times that of other age groups. Furthermore, Gen Z comprises 35% of all crypto investors, playing a pivotal role in market expansion.

The Web3 gaming market in India has grown, particularly among Gen Z, with 50% of gamers under 25 adapting quickly to new gaming paradigms. Web3 games show a higher average revenue per user (ARPU) at $220, compared to $120 for Web2 games, with higher payment user and spend ratios.

The government has also initiated the National Blockchain Framework to enhance the safety and transparency of services used by citizens. The framework includes components like Vishvasya Blockchain as a Service, NBF Lite sandbox for startups and universities, Praamaanik for mobile app verification, and the National Blockchain Portal. The central bank’s pilot for a Central Bank Digital Currency (CBDC) has garnered 5 million users, testing new blockchain-based payment methods.

### Developer Ecosystem

India has become a global hub for innovative Web3 founders and developers, accounting for 12% of the world’s crypto developers.

A survey of over 500 developers revealed rapid growth in India’s Web3 ecosystem, driven by young talent, entrepreneurial energy, and expanding global exposure. Partnerships with universities and flexible work models support this growth.

Despite increasing international exposure, 51% of developers feel their salaries do not meet global standards.

Hackathons and developer communities are crucial for the growth of the Indian Web3 ecosystem, offering hands-on experience, mentorship, funding opportunities, and global exposure, which help shape the direction of the next generation of developers.

### Regulatory, Tax, and Policy

The Web3 industry in India faces rapid regulatory and tax changes. Government regulations and high tax rates constrain market growth, necessitating policy changes for industry development.

Since 2023, the Indian government has intensified anti-money laundering regulations, mandating all Virtual Asset Service Providers (VASPs) to register, conduct customer identity verification, maintain transaction records, and appoint dedicated AML officers.

By late 2024, the government adopted stringent measures, including blocking online access for non-compliant foreign crypto exchanges. This underscores the need for regulatory compliance for market entry.

Tax policies have also transformed. The 2025 financial bill introduced the OECD crypto-asset reporting framework for mandatory trading and user information reporting. The legal definition of virtual digital assets will expand to include a broader range of ‘crypto-assets’.

Current tax policies heavily burden the industry, imposing a 30% flat tax rate on crypto investment gains without deductions and a 1% tax on all transactions, significantly limiting market liquidity.

The absence of a dedicated Web3 regulatory body results in overlapping jurisdiction and regulatory ambiguity regarding virtual assets and decentralized protocols. Web3 companies struggle with basic financial infrastructure, and many exchanges restrict crypto withdrawals, hindering user self-custody options.

Sustainable growth in India’s Web3 sector requires a specialized regulatory framework, reduced tax burdens, improved financial service accessibility, and reasonable regulations for non-custodial services.

## India on the Brink of Transformation

Overall, India has developed a mature ecosystem of industries and users, yet regulatory confusion remains the core issue. While macro factors are generally favorable, a comprehensive regulatory framework is still lacking. Despite government-led blockchain initiatives, the absence of a dedicated regulatory body and overlapping jurisdictions create external apprehensions.

In the changing global regulatory landscape, such confusion significantly diminishes market appeal and serves as the primary barrier for investors and companies. Fortunately, ongoing dialogues between industry leaders, including Hashed Emergent, and regulatory authorities may spark the needed change.

A phased strategy is crucial for accessing the Indian market. The first step is to onboard Web3-adaptable users whose understanding and numbers in India can yield meaningful outcomes. This requires local language support, local marketing efforts, and collaboration with local hiring or marketing agencies.

Next, target builders directly, leveraging partnerships with firms like Hashed Emergent. Local agencies alone may lack the expertise for adequate builder support.

Finally, expand to strategic partnerships with the government and enterprises. Despite some regulatory confusion, the government’s blockchain framework has shown tangible results, offering strategic collaboration opportunities to lead market transformations.

*This article is based on the research report “India: A Web3 Market Needing Numbers” by Tiger Research, a partner of Blockmedia. The full report is available on the Tiger Research official website.*