India’s creator economy is rapidly transitioning from an informal ecosystem into a structured and institutionalised industry, driven by increasing brand accountability, creator formalisation, AI-led efficiencies, and tighter regulatory oversight, according to a new report released by Kofluence.The influencer marketing platform’s “Decoding Influence: Annual Research Report 2026”, based on data from over 2 million creators, more than 1,000 surveys, and interviews with 50+ industry professionals, said India’s influencer marketing sector is currently valued at Rs 3,000-3,500 crore in 2025 and is projected to expand to Rs 4,500-5,000 crore by 2027.The sector is sustaining a 22% CAGR, fuelled by deeper brand integration, creator professionalisation, and the institutionalisation of influencer marketing initiatives.The report said influencer partnerships are increasingly being transformed into measurable, business-critical operations rather than experimental branding exercises.Also read | AI, connected TV, programmatic buying reshape India’s digital ad market“What this report captures is a market that has crossed a structural threshold. With 15% of India’s active creator base now registered as formal business entities, and brands linking influencer marketing directly to revenue targets, influence is no longer a soft channel. India is not following global best practices in creator commerce -- it is writing them,” said Sreeram Reddy Vanga, CEO and Co-Founder, Kofluence.According to the report, India’s creator ecosystem now comprises 4 million-4.4 million active professionals, with Instagram serving as the primary platform for 3.3 million-3.7 million creators.The report identified business incorporation as one of the defining shifts in the sector, with 15.2% of creators now registered as business entities or GST individuals, making formal compliance increasingly critical for securing institutional brand partnerships. Nano creators with 1,000-10,000 followers accounted for 61.1% of surveyed creators, reflecting the growing importance of targeted community engagement.Regional India is also emerging as the growth engine for the creator economy. With India crossing 900 million internet users, Tier 2, Tier 3, and Tier 4 cities are becoming central to creator-led campaigns as brands increasingly focus on hyper-local and vernacular content strategies.More than 62% of creators reported a rise in regional and vernacular campaign briefs from brands. Engagement rates in Tier 3 and Tier 4 markets ranged between 4.5% and 5.5%, compared with 3%-4% in metro cities, while campaign costs were significantly lower at Rs 35,000-Rs 90,000 against Rs 3.8 lakh-Rs 4.5 lakh in metro markets, according to the report.Also read | The big screen’s back in spotlight as Rs 13,000 crore box-office revival fades OTT boomBrands are also tightening performance accountability around influencer spending. About 13.3% of brands now directly link influencer marketing expenditure to formal revenue targets, while another 46.4% apply campaign-level performance accountability. Around 62% of brand professionals surveyed said long-term creator partnerships deliver better ROI than one-off campaigns.Platform spending remains heavily concentrated on Instagram, with 93.1% of brands identifying it as their primary influencer marketing platform. E-commerce accounted for the highest sectoral spend at 23%, followed by FMCG at 19%.The report also highlighted the growing adoption of AI tools across the creator economy. Nearly 59% of creators said they regularly or occasionally use AI tools for content ideation, creative design, trend analysis, and scheduling. Content ideation emerged as the leading AI use case at 64.4%, followed by creative design at 31.9% and trend analysis at 28.1%.Brands are increasingly deploying AI across creator discovery, performance forecasting, and automated reporting, with 61% actively exploring technology platforms to streamline influencer campaigns.“AI has done what most technology promises and rarely delivers: it has compressed the production overhead that was preventing India’s creator class from operating at business scale. The governance question is now the defining one. ASCI disclosures, SEBI scrutiny, DPDP compliance -- these are not obstacles. They are the structural filters that will separate the durable from the disposable,” said Ritesh Ujjwal, Co-Founder, Kofluence.The report said tighter oversight by the Advertising Standards Council of India, the Securities and Exchange Board of India, and implementation of the Digital Personal Data Protection Act are collectively formalising the creator economy and pushing brands and influencers towards greater transparency and accountability.