The central government announced that India has successfully overtaken Japan to become the world's fourth-largest economy with a size of $4.18 trillion, according to an official press release issued on Monday, 29 December 2025.
India is set to overtake Germany and become the third-largest economy by 2030, on the backdrop of strong growth numbers.
“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 with a projected GDP of $7.3 trillion by 2030,” according to the release.
The United States and China are the two largest economies in the world based on their gross domestic product (GDP) values.
What's fueling India's growth story?
The central government, in its recent release, cited India's growth momentum with the GDP expanding to a six-quarter high level in the July-September quarter of the financial year ending 2025-26.
The country's growth stems from its resilience amid persistent global trade uncertainties. Domestic drivers in India, fueled by private consumption, played a central role in supporting the country's GDP expansion.
The government also cited that inflation remaining below the lower tolerance, declining unemployment and improving export performance are among the high-frequency indicators that support India's growth.
“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,” the government said.
India's GDP growth
India's real GDP grew by 8.2% in the second quarter of 2025-26, up from 7.8% in the first quarter and 7.4% in the fourth quarter of the previous fiscal year.
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, it said.
Domestic drivers, led by robust private consumption, played a central role in supporting this expansion.
The release further said that international agencies have echoed this optimism, citing projections made by various entities.
The World Bank has projected a 6.5% growth rate in 2026; Moody's expects India to remain the fastest-growing G20 economy, with growth rates of 6.4% in 2026 and 6.5% in 2027.
The IMF has raised its projections to 6.6% for 2025 and 6.2% for 2026; the OECD forecasts 6.7% growth in 2025 and 6.2% in 2026.
Additionally, S&P anticipates a growth rate of 6.5% in the current fiscal year and 6.7% in the next; the Asian Development Bank has increased its 2025 forecast to 7.2%; and Fitch has raised its FY26 projection to 7.4% due to stronger consumer demand.
