India poised to become 3rd-largest economy with GDP of $7.3tr by 2030

With gross domestic product (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 with projected gross domestic product (GDP) of $7.3 trillion by 2030, an official statement said on Monday.

The growth momentum further surprised on the upside, with GDP expanding to a six-quarter high in Q2 of 2025-26, reflecting India’s resilience amid persistent global trade uncertainties.

Domestic drivers-led by robust private consumption-played a central role in supporting this expansion, according to the statement.

India’s real gross domestic product grew 8.2 per cent in Q2 FY2025-26, up from 7.8 per cent in the previous quarter and 7.4 per cent in Q4 of 2024-25, led by resilient domestic demand amidst global trade and policy uncertainties. Real gross value added (GVA) expanded by 8.1 per cent, catalysed by buoyant industrial and services sectors.

High-frequency indicators point to sustained economic activity: inflation remains below the lower tolerance threshold, unemployment is on a declining trajectory, and export performance continues to improve. Furthermore, financial conditions have stayed benign, with strong credit flows to the commercial sector, while demand conditions remain firm, supported by a further strengthening of urban consumption.

“India is among the world’s fastest-growing major economies and is well-positioned to sustain this momentum. With the ambition of attaining high middle-income status by 2047 − the centenary year of its independence − the country is building on strong foundations of economic growth, structural reforms, and social progress,” according to the statement.

The RBI revised India’s GDP growth forecast for FY 2025-26 upwards to 7.3 per cent from the earlier estimate of 6.8 per cent.

India’s domestic growth is on an upward trajectory owing to multiple factors such as- robust domestic demand, income tax and goods and services tax (GST) rationalisation, softer crude oil prices, front-loading of Government capital expenditure (CAPEX), along with facilitative monetary and financial conditions, supported by benign inflation.

Looking ahead, domestic drivers like favourable agricultural prospects, the sustained effects of GST rationalisation, benign inflation, and the strong balance sheets of corporates and financial institutions − coupled with supportive monetary and financial conditions − are expected to continue bolstering the economic activity.

External factors such as services exports are projected to remain robust, while the swift conclusion of current trade and investment negotiations offers additional upside potential. Ongoing reforms are likely to further enable growth prospects. Present macro-economic situation presents a rare “goldilocks period” of high growth and low inflation, said the statement.

Meanwhile India’s real GDP growth is projected at 7.4 per cent for FY26, up from 6.5 per cent in FY25, a report has said, highlighting seasonal pick up in electricity, mining and construction sectors.

The report from ICRA said that growth is expected to ease below 7 per cent in H2 FY26 from 8 per cent in H1 because of an unfavourable base effect and moderation in exports.

The report expects a pause in the February 2026 policy review by the RBI, with future decisions to be guided by the FY27 Union Budget and evolving inflation-growth dynamics.

Meanwhile, economic activity remained healthy in Q3 FY26, aided by GST rate‑cut led festive demand and seasonal upticks in some sectors.

ICRA expects consumption volumes of goods and services as well as manufacturing volumes to have benefited from GST cuts and festival demand in Q3, though the export drag may intensify in H2 unless a US trade deal materialises.

The firm forecasts CPI inflation to plunge to 2 per cent in FY26 from 4.6 per cent in FY25, with WPI at 0.4 per cent. CPI rose to 0.7 per cent in November 2025 from 0.3 per cent in October, due to a narrower deflation in food and beverages.

Additionally, mining and construction activity as well as electricity demand are set to witness a seasonal pick up in the coming months, after the easing owing to rainfall-related disruptions, it said.

“Cement production is expected to grow 6.5-7.5 per cent in FY26. Steel demand growth may moderate to 7-8 per cent after strong previous years. Electricity demand growth is muted at 1.5-2 per cent for FY26,” the report noted.

Agencies