India's Web3 ecosystem raised $626 million in total funding over the past year, with $396 million concentrated in Series B and later rounds — the first meaningful growth-stage capital since 2022. The data, published March 24 in the fourth edition of Hashed Emergent's India Web3 Landscape Report, ...
"We have now seen an increasing interest in using this technology and a combination of tokenisation and AI to get something done. But Finternet is a way of doing this strategically, holistically, in a structured way for all kinds of assets, high performance, within a regulatory envelope." — Nandan Nilekani, Co-founder, Infosys
India's Web3 ecosystem raised $626 million in total funding over the past year, with $396 million concentrated in Series B and later rounds — the first meaningful growth-stage capital since 2022. The data, published March 24 in the fourth edition of Hashed Emergent's India Web3 Landscape Report, marks a structural shift from seed-heavy speculation to late-stage deployment.
The numbers run deeper than venture capital. India's share of global Web3 developers climbed to 15.2%, up from 12% in 2024, making it the only major market where the developer base is expanding while global crypto commits have fallen 75% since early 2025 according to Electric Capital data. On-chain value received doubled to $338 billion, and trading volume rose 114%. India has now held the top position in Chainalysis's Global Crypto Adoption Index for three consecutive years.
Yet these gains coexist with a tax regime that has pushed an estimated 72.7% of Indian crypto trading volume to offshore platforms. The contradiction — world-leading adoption alongside one of the most punitive tax structures in crypto — defines the current state of India's Web3 economy.
Indian Web3 startups have raised a cumulative $3.5 billion across 1,250+ ventures since 2020, according to Hashed Emergent. The past year's $626 million total represents a qualitative change in the capital structure.
Infrastructure led with $362 million — 58% of the total — with AI-integrated blockchain and DePIN (Decentralized Physical Infrastructure Networks) as the dominant themes. Finance-sector funding nearly tripled to $234 million, spanning payments, derivatives, staking, and real-world asset (RWA) tokenization.
The shift toward larger, later-stage rounds came at the expense of deal count, which fell 31%. Fewer checks, bigger sizes. This mirrors a broader pattern visible in the global crypto venture market, where Q1 2026 saw $5.9 billion in total crypto funding — but concentrated in fewer hands.
Notable Indian protocol builders like EigenLayer, Avail, and Sentient have gained global traction. The report highlights that Indian founders now operate across the full stack, from Layer 1 infrastructure to application-layer DeFi.
The global context matters here. Electric Capital's data shows weekly crypto code commits dropped approximately 75% and active developers fell 56% since early 2025, with monthly active developers declining from a peak of roughly 31,000 in 2022 to an estimated 18,000 by mid-2025. AI repositories are absorbing the talent — a structural headwind for every blockchain ecosystem.
India is the exception. At 15.2% of global Web3 developers, up from 12% in 2024, India is the only major market on an upward trajectory. The U.S. developer base has been contracting. The Hashed Emergent report breaks down builder interest: 36.6% are focused on DeFi, while 33.2% are working at the intersection of AI and Web3.
The demographic composition of India's developer base is also distinct. A young, technically trained workforce — India produces roughly 1.5 million engineering graduates annually — provides a structural labor advantage that most crypto ecosystems lack. Whether this translates to sustained protocol-level innovation or primarily supplies talent to foreign-domiciled projects remains an open question.
India received $338 billion in on-chain value over the reporting period, a figure that doubled year-over-year. Chainalysis's 2025 Global Adoption Index ranked India first for the third consecutive year, ahead of the United States, across all four sub-indices: centralized service value, retail centralized value, DeFi value, and peer-to-peer exchange value.
The APAC region as a whole saw crypto transaction volume grow from $1.4 trillion to $2.36 trillion, with India, Vietnam, and Pakistan as the primary drivers.
Trading activity surged 114%, with new trader registrations up 27%. The demographic tilt is pronounced: approximately 50% of trading activity comes from the 18-25 age group. Female participation grew 20% — double the rate of male growth. In the derivatives segment, 61% of new participants are aged 18-25, with that cohort growing 2.5x annually. Eastern India saw a sixfold surge in derivatives traders specifically.
These are grassroots adoption metrics. India's crypto economy is not driven by institutional allocators or treasury diversification strategies. It runs on retail — young, mobile-first users seeking yield and exposure that traditional Indian financial products do not easily provide.
India's crypto tax framework, introduced in Budget 2022 and unchanged in Budget 2026-27, imposes a 30% flat tax on capital gains from Virtual Digital Assets (VDAs) with no loss set-off provisions and a 1% Tax Deducted at Source (TDS) on all transfers exceeding ₹10,000.
The consequences are measurable. According to crypto tax platform KoinX, 72.7% of Indian crypto trading volume migrated to offshore platforms in fiscal year 2025 — up from 45% in mid-2023 and 58% in early 2025. Industry estimates indicate approximately ₹4.87 lakh crore (roughly $58 billion) in trading volume moved offshore in 2025 alone.
The 1% TDS is particularly damaging for market makers and high-frequency traders, whose business models depend on thin margins across many trades. The inability to offset crypto losses against other income — a standard provision in most tax jurisdictions for other asset classes — further discourages onshore activity.
Starting April 2026, transaction-level reporting obligations become mandatory, with penalties of ₹200 per day for late filings and ₹50,000 for inaccurate reporting. India is also adopting the OECD's Crypto-Asset Reporting Framework (CARF) by April 2027, which will enable automatic global data sharing on offshore wallets and exchange trades.
The policy creates a paradox: India has the world's highest crypto adoption but collects tax on less than a third of its domestic trading activity. Calls for reform — lowering TDS to 0.01%, allowing loss set-offs, reducing the flat rate — were rejected in Budget 2026. Finance Minister Nirmala Sitharaman did not revise the framework despite sustained industry lobbying.
The most significant enterprise development is Reliance Jio's partnership with Aptos Labs to build a blockchain-based rewards system — JioCoin — for its 500 million subscribers. The program is in beta with approximately 9.4 million users. If fully deployed, it would represent one of the largest consumer-facing blockchain integrations globally, potentially larger than any single DeFi protocol's user base.
Flipkart and Nazara are also cited in the Hashed Emergent report as active enterprise adopters, though the scope of their deployments is less detailed.
India's government has its own blockchain footprint. The National Blockchain Framework has processed 396 million verifications across 105 million records, according to government data. This is infrastructure-grade deployment — not experimental.
The enterprise layer matters because it creates a demand floor for developer talent and infrastructure that is independent of token prices. When Jio integrates blockchain rewards for 500 million users, it generates sustained engineering demand regardless of whether ETH trades at $2,000 or $5,000.
Finternet, conceptualized by Infosys co-founder Nandan Nilekani and expected to go live in 2026, represents India's next Digital Public Infrastructure (DPI) layer. It aims to enable tokenization of real-world assets — real estate, gold, bonds, financial instruments — within a regulatory-compliant framework.
The project has over 30 confirmed ecosystem partners spanning cross-border payments, decentralized identity, asset tokenization, and programmable finance. Pilots are operating across India, Singapore, Switzerland, and the United States.
The RBI announced a related tokenization pilot in late 2025, where banks would issue digital tokens representing traditional assets — certificates of deposit, stocks, bonds — settling against the wholesale CBDC as the base layer.
India's DPI track record is relevant context. The UPI payments system processed over 16 billion transactions per month by late 2025. Aadhaar covers 1.4 billion biometric identities. If Finternet achieves even a fraction of UPI's penetration for asset tokenization, the on-chain economic implications would be substantial.
The question is execution. India's DPI stack has historically succeeded because it operates as public infrastructure with private sector integration — not as a permissionless protocol. Finternet follows the same model: tokenization within a "regulatory envelope," as Nilekani described it. Whether that envelope proves too restrictive for DeFi-native innovation or provides the trust layer needed for mass-market asset tokenization will shape India's Web3 trajectory for the next decade.
India's Web3 ecosystem presents a case study in contradictory policy signals. The country produces more blockchain developers than any peer market, processes more on-chain value than any other nation according to Chainalysis, and is deploying enterprise-grade integrations at a scale (Jio's 500M user base) that most crypto projects can only model theoretically.
Simultaneously, its tax framework has driven nearly three-quarters of domestic trading offshore, reducing both liquidity and tax revenue. The Hashed Emergent report frames the central question directly: "How quickly that gap closes will determine whether India's current advantage compounds into sustained global leadership or begins to diffuse across geographies."
The data suggests India's Web3 economy is growing in spite of, not because of, its regulatory posture on taxation. If Finternet delivers on its tokenization mandate and the GENIUS Act-inspired global regulatory convergence prompts India to revisit its tax rates, the country's structural advantages — developer talent, DPI infrastructure, scale — could compound rapidly. If the tax regime remains unchanged, India will continue exporting its most valuable Web3 asset: its users' activity, routed through offshore platforms that capture both volume and revenue.