Wed Dec 31,
India is on track to overtake Germany and become the world’s third-largest economy within the next 2.5 to 3 years, propelled by robust growth and strong domestic demand. With GDP valued at $4.18 trillion, India has already surpassed Japan to rank fourth globally and is projected to reach $7.3 trillion by 2030, according to official estimates.
Insights
India is set to overtake Germany to become the world's third-largest economy within 2.5 to 3 years, driven by strong domestic demand and resilient growth.
With GDP at $4.18 trillion, India has already surpassed Japan and is projected to reach $7.3 trillion by 2030.
Robust consumption, benign inflation, improving employment and supportive policy conditions underpin this momentum.
The country’s economic momentum has strengthened, with GDP expanding to a six-quarter high in the second quarter (Q2) of fiscal 2025-26 (FY26), underpinned by resilient private consumption, expanding industrial and services activity, and sustained export performance. High-frequency indicators show inflation remaining below the lower tolerance threshold and unemployment on a declining trajectory, supporting continued domestic expansion, a government release said.
Reflecting confidence in the growth outlook, the Reserve Bank of India revised India’s GDP growth forecast for FY26 upwards to 7.3 per cent from 6.8 per cent, citing supportive monetary and financial conditions, softer crude prices, and front-loaded government capital expenditure.
Looking ahead, favourable agricultural prospects, GST rationalisation, healthy corporate and financial sector balance sheets, and ongoing trade negotiations are expected to sustain activity. These drivers, combined with structural reforms and strong consumption, position India to displace Germany as the world’s third-largest economy by the late 2020s.