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Despite a few hiccups this year, the Indian internet industry is expected to grow and could reach a valuation of $5 trillion by 2030, a report showed on Monday.

Home to 780 million internet users, India is home to the second largest internet user base in the world.

"As digital will continue to play a significant role, India's internet GMV (not valuation) will grow to about $1 trillion by 2030, equivalent to $5 trillion in public and private market cap,a according to data by market intelligence firm Redseer Strategy Consultants.

An average Indian spends around 7.3 hours per day on their smartphone, one of the highest in the world.

"The time spent is across online messaging, social media, YouTube streaming, OTT content and short-form video. Interestingly, but not surprisingly, most online users come from tier 2 cities and beyond," the report mentioned.

There is a new trend in content consumption where the time spent on user-generated content is 2X of platform-generated content.

The drastic increase in digital consumption and increased digital penetration in Tier 2 and beyond cities are the primary growth drivers responsible for the spike in India's digital advertising ecosystem.

With an increasingly high flow of consumers from tier 2 and beyond cities adopting short video commerce, India is likely to witness a massive surge in digital ad investments instead of driving sales, the report said.