India is starting to pay for apps, not just download them

India's mobile app market is undergoing a transformation, shifting from being primarily a hub for app downloads to a growing center for app monetization. For the second quarter of this year, Indian consumers spent a record $345 million on mobile applications, up 35% from the same period last year, according to a recent report by Sensor Tower, a leading app-market intelligence firm. This marks a significant shift in how Indian users engage with digital content, with increasing willingness to pay for premium services such as artificial intelligence tools, streaming platforms, and productivity apps. The rise in spending reflects a broader trend of growing monetization within the Indian app ecosystem. According to Sensor Tower, the average revenue per app download in India has more than doubled over the past three and a half years. Meanwhile, the number of app downloads has stabilized at approximately 6.3 billion since 2023. This indicates that while the volume of downloads remains high, the value derived from each download is increasing significantly. Eve Chen, an insights analyst at Sensor Tower, noted that the evolution of India’s app market can be attributed to several factors. These include the widespread adoption of digital payment systems such as India’s Unified Payments Interface, which allows direct transactions from bank accounts, and the proliferation of digital wallets. These innovations have made in-app purchases easier and more accessible, encouraging users to subscribe to premium services. Additionally, there is a growing acceptance of app-based subscriptions and digital offerings among Indian consumers. Globally, India's app revenue growth stood out in the second quarter, with more than $200 million in consumer spending recorded. This represents the fastest growth rate among major app markets, surpassing countries like Mexico (30%) and Turkey (25%), while even the United States saw a slight decline in app revenue. Chen emphasized that these figures indicate India is no longer merely the world’s largest app download market but is also emerging as one of the fastest-growing markets for app monetization. Despite this progress, India still lags behind more developed markets in terms of revenue per download. The average revenue per download in the U.S. is around $4.60, in South Korea $3.90, and in Japan $6.10, whereas in India it remains significantly lower. However, the upward trajectory of India’s app monetization suggests substantial potential for future growth. Generative AI has played a pivotal role in driving this growth. OpenAI’s ChatGPT and Anthropic’s Claude accounted for nearly 83% of India’s AI app revenue in the second quarter, according to Sensor Tower. This highlights the rapid adoption of AI-powered tools among Indian users, who are increasingly relying on these technologies for productivity and information retrieval. Non-gaming apps have also contributed significantly to the rise in app revenue. As of the first half of 2026, non-gaming categories accounted for 68% of India’s mobile app revenue, up from 58% three years prior. This shift underscores a diversification in consumer preferences, moving away from traditional gaming towards a broader range of digital services. Subscription-based models have continued to thrive in India, with global platforms such as Google One leading the charge. During the second quarter, Google One became the highest-grossing mobile app in India. Streaming services like Amazon Prime Video, Crunchyroll, Sony LIV, and JioHotstar also witnessed increased consumer spending, reflecting a growing appetite for digital content consumption. While the initial surge in AI-related app spending has slowed slightly, the overall trend remains robust. Appfigures, another app analytics firm, reports that subscription revenue continues to rise, albeit at a slower pace than before. Founder and CEO Ariel Michaeli noted that the initial enthusiasm surrounding AI has waned somewhat, yet the numbers remain impressive. He estimated that ChatGPT generates about $60,000 daily in India, with around 1.8 million downloads in the past month.