India has officially moved ahead of Japan to become the world’s fourth-largest economy, with its gross domestic product reaching $4.18 trillion, the central government said in a press release issued on Monday, December 29, 2025.
On the back of strong and sustained growth, India is now expected to surpass Germany and claim the third spot globally by 2030. The government projects India’s GDP to expand to around $7.3 trillion over the next five years.
“With GDP valued at $4.18 trillion, India has surpassed Japan to become the world’s fourth-largest economy and is poised to displace Germany from the third rank in the next 2.5 to 3 years,” the release said.
The United States and China continue to lead the global economy as the world’s two largest economies by GDP.
What’s driving India’s growth
According to the government, India’s economic momentum strengthened further in the July–September quarter of FY26, with GDP growth touching a six-quarter high. This expansion came despite ongoing global trade uncertainties, highlighting the economy’s resilience.
Domestic demand has been the primary engine of growth. Private consumption, especially in urban areas, has remained strong and continues to support overall economic activity.
The government also pointed to several positive indicators, including inflation staying below the lower tolerance level, falling unemployment, improving export performance, and healthy credit growth to the commercial sector. Financial conditions remain supportive, while demand conditions continue to firm up.
GDP performance and outlook
India’s real GDP grew 8.2 percent in the second quarter of FY26, accelerating from 7.8 percent in the first quarter and 7.4 percent in the final quarter of the previous fiscal year. The stronger-than-expected performance underscores the economy’s ability to withstand global headwinds.
International institutions have echoed this optimism. The World Bank expects India to grow 6.5 percent in 2026, while Moody’s projects the country will remain the fastest-growing G20 economy, with growth of 6.4 percent in 2026 and 6.5 percent in 2027.
The IMF has raised its forecasts to 6.6 percent for 2025 and 6.2 percent for 2026. The OECD estimates growth of 6.7 percent in 2025 and 6.2 percent in 2026. S&P expects growth of 6.5 percent this fiscal year and 6.7 percent next year, while the Asian Development Bank has revised its 2025 forecast upward to 7.2 percent. Fitch has increased its FY26 projection to 7.4 percent, citing stronger consumer demand.
Together, these projections reinforce India’s position as one of the world’s fastest-growing major economies, with a clear trajectory toward becoming the third-largest global economy by the end of the decade.
