India's Web3 Developer Market Grows 140% in a Decade, Driven by Retail Transactions and Institutional Adoption

India has emerged as a significant contributor to the global Web3 ecosystem, despite the absence of locally tailored crypto regulations. The country's share of global Web3 developers has grown from 5% to 12% over the past decade, positioning it as the second-largest developer market globally, trailing only the United States. This growth is driven by several key factors, including retail crypto transactions on centralized services, institutional adoption, and retail DeFi transactions.

The Indian Web3 landscape is dominated by a younger generation, with approximately 80% of all blockchain developers in the country falling between the ages of 18 and 27. These developers are particularly drawn to blockchains like Solana, Ton, Aptos, and Base, which are gaining traction across various sectors due to the expanding presence of layer-1 and layer-2 ecosystems. However, challenges remain, such as the high cost of customer acquisition for Web3 gaming projects and the lack of quality gameplay beyond financial incentives.

Despite these hurdles, investments into the Indian Web3 landscape saw a 224% increase in 2024 compared to the previous year. This growth is attributed to various funding avenues, including local funds, ecosystem funds, and corporate venture arms of leading exchanges. The report highlights that the lack of traditional venture capital and the absence of growth capital in the Web3 world make it difficult for Indian firms to raise funds, leading entrepreneurs to explore crowd sales as an alternative.

India is home to the second-largest developer market and the third-largest founder base globally, making it a hub for innovation in the Web3 space. However, barriers to large-scale investments include slower-than-anticipated growth of startups and unclear regulations and compliances. The report calls for reforms in crypto tax deductions and reporting, as well as federal guidance and tax implications to incentivize the growth of the Web3 sector.

Despite an active high-tax environment on cryptocurrency, small-scale crypto investments have seen an uptick in India. Traders generally prefer small, frequent trades, with a significant portion of the market being female, highlighting the potential for greater participation. The policy wish list for the Indian Web3 sector includes a regulatory framework for virtual asset service providers, tax rationalization, streamlined banking and payment access, and clarity on existing regulations.

Recent regulatory initiatives, such as the blocking of URLs of locally unlicensed crypto exchanges