The Web3 Market Needs Numbers, and You Need India – Tiger Research

# India: The Prime Market for Web3 Projects - A Demographic and Regulatory Analysis ## Key Demographics and Market Potential With a population of 1.4 billion, a median age of 28, 9.75 million developers, and over 1,200 projects attracting $3 billion in investment, India stands as a prime market for establishing the 'numbers' critical to a thriving Web3 ecosystem. ## Regulatory Confusion as the Major Obstacle Significant challenges persist due to regulatory ambiguity: a fixed tax rate of 30%, a 1% withholding tax, lack of a dedicated regulatory body, and complex jurisdictional issues. These regulatory hurdles are the primary impediments to market growth. ## Strategic Approach is Necessary A phased approach is essential for market entry: onboarding Web3-friendly users (local language support, localized marketing), targeting builders (collaboration with local investors), and expanding relationships with government and enterprises. ### 1. Why You Need to Know About the Indian Market The Web3 market sees continuous emergence of new projects focused heavily on 'numbers' – users, builders, and investors. These figures are crucial as they represent participation in the ecosystem. To achieve meaningful numbers, many projects are turning their attention to Asia, with India at the forefront. India's first strength is its young median age. At approximately 28 years, younger than Indonesia (30) and Vietnam (32), India's demographic is quick to adopt and enthusiastic about new technologies. Secondly, India's massive population – over 1.4 billion people – currently has only about 8% engaged with cryptocurrency, indicating immense potential for Web3 expansion. Thirdly, India's impressive development capabilities are evidenced by the presence of top-tier engineering schools and 9.75 million developers, along with successful Web3 projects like Polygon. Given these factors, India is well-suited to generate significant 'numbers,' and numerous projects are already seeing results by entering this market. However, like any region, there are pros and cons. Insight from the Hashed Emergent India Market Report, authored by an emerging market-focused Web3 venture capital firm located in India, can provide comprehensive knowledge crucial for market entry. ### 2. Hashed Emergent’s Summary #### 2.1 Web3 Ecosystem India has built an extensive Web3 ecosystem with over 1,200 active projects. Indian Web3 startups have secured more than $3 billion in investments, with 2024 projections showing over $564 million – more than double the growth from 2023. Infrastructure remains the most popular investment area, followed by finance, while entertainment investments have seen a significant decline. Indian founders abroad, leading projects like Eigen Layer, Sentient, and Avail, excel in developing globally recognized services and attracting substantial investments. Emerging sectors such as Decentralized Physical Infrastructure Network (DePIN) and Blockchain as a Service (BaaS) are also gaining investor interest, demonstrating the potential of diversified industry applications for decentralized technologies. In the AI era, key investment areas include AI-based infrastructure, middleware, and data tools. Hashed Emergent and other major venture capital firms like Polygon are actively cultivating and investing in India’s Web3 ecosystem. #### 2.2 Consumer and Enterprise Adoption India’s cryptocurrency market has shown a notable resurgence since 2023. Chainalysis's cryptocurrency adoption index ranked India first, scoring highly in both centralized (CEX) and decentralized (DeFi) exchange categories. Retail investors’ portfolios are composed of 45% blue-chip cryptocurrencies, with meme coin trading volumes increasing fivefold compared to other crypto assets, indicating shifting investment preferences. The 27-40 age group leads token investments with high incomes and strong market awareness, particularly in the 40s, where investment per user is three times higher than other age groups. Gen Z accounts for 35% of all crypto investors, playing a crucial role in market expansion. The Web3 gaming market in India has seen growth, especially among the youth, with 50% of gamers under 25 adapting quickly to new gaming paradigms. The average revenue per user (ARPU) is $220 for Web3 games, compared to $120 for Web2 games, reflecting a superior revenue structure. The payment user rate in Web3 games stands at 64%, with heavy spenders at 11%, outperforming Web2 games (56% and 8%, respectively). Furthermore, 38% of traditional gamers have already experienced Web3 games, with 60% continuing to participate actively. The Indian government has proactively developed a National Blockchain Framework to enhance the safety and transparency of services used by citizens. Key components include the Vishvasya blockchain service platform, the NBFLite sandbox for rapid research by startups and universities, the Praamaanik mobile app authenticity verification, and the National Blockchain Portal. Additionally, the central bank digital currency (CBDC) pilot by the Reserve Bank of India (RBI) has reached five million users in collaboration with 16 banks, testing new blockchain-based payment methods. #### 2.3 Developer Ecosystem India has positioned itself as a global hub for innovative founders and developers across various Web3 domains, comprising 12% of the global cryptocurrency developer base. A survey of over 500 developers reveals rapid growth driven by young talent, entrepreneurial energy, and increased global exposure. The ecosystem supports growth through university partnerships and flexible work models. Despite rising international exposure, 51% of developers feel their salaries are below global standards. Hackathons and developer communities are pivotal, providing practical experience, mentorship, funding opportunities, and global exposure, shaping the growth trajectory of the next generation of developers. #### 2.4 Regulatory, Tax and Policy India’s Web3 industry faces regulatory and tax policies in a turbulent transition phase. The strong regulatory moves and high tax rates are stifling market growth, necessitating policy changes for industry advancement. Since 2023, the Indian government has intensified its anti-money laundering (AML) regulations for virtual assets, mandating all virtual asset service providers (VASP) to register, conduct customer identity verification, maintain transaction records, and appoint a dedicated AML officer. In late 2024, the Indian government further tightened regulations by blocking online access to foreign cryptocurrency exchanges not complying with local regulations. This highlights the necessity of regulatory compliance for market entry in India. The tax policy is also evolving. The 2025 fiscal bill introduces the OECD crypto-asset reporting framework, establishing mandatory reporting of crypto-asset transactions and user information. The legal definition of virtual digital assets is set to be broadened to encompass 'crypto-assets.' The current tax regime, with a 30% fixed rate on crypto investment profits without deductions and a 1% withholding tax on all transactions, significantly burdens the industry, restricting market liquidity. The absence of a dedicated regulatory body adds to the challenges. Overlapping jurisdiction among various government agencies results in regulatory ambiguity regarding virtual assets classification and decentralized protocols. Web3 companies face difficulties in accessing basic financial infrastructure, from opening bank accounts to using payment services. Many exchanges have restricted crypto withdrawals, limiting user options for self-custody of assets. For sustainable growth, India’s Web3 industry needs targeted regulatory frameworks, reduced tax burdens, improved access to financial services, and rational regulations for non-custodial services like self-custody. ### 3. India on the Brink of Major Advancements In summary, while India has developed a mature ecosystem of industries and users, regulatory confusion remains a significant hurdle. Macro factors largely favor growth, but a mature regulatory framework is essential for ecosystem development. Despite the government’s operational blockchain initiatives, the absence of a dedicated regulatory body and overlapping jurisdictions create external perceptions of instability. In the shifting global regulatory landscape, this confusion undermines market attractiveness and poses the biggest barrier to investors and companies. Fortunately, ongoing dialogues between industry leaders, including Hashed Emergent, and regulatory bodies show promise for initiating necessary changes. Engaging with the Indian market requires a phased strategy. Firstly, focus on onboarding Web3-ready users. Indian users possess high Web3 awareness and a vast scale, making successful user onboarding a key milestone. This requires support for local languages, local marketing efforts, and hiring local talent or collaborating with local marketing agencies. Secondly, targeting builders is crucial. Direct engagement with investors like Hashed Emergent is critical as local agencies alone often lack the expertise and specialization needed to support builders. Lastly, expanding cooperation with the government and enterprises is essential. Although regulatory confusion persists, the creation of the National Blockchain Framework and other practical achievements indicate potential for growth through strategic partnerships, positioning in the market as leaders driving change. *This article is based on the complete "Numbers Needed for the Web3 Market, Your Essential India" report by Tiger Research, a global Web3 research institution and partner of BlockMedia. The report is available on the official website.*