India Overtakes Japan to Become the World’s Fourth Largest Economy

India became the fourth largest economy in the world with an economy size of USD 4.18 trillion; India surpassed Japan’s economy. India's economy grew by 8.2% in the second quarter of the financial year 2025-26, which is up from 7.8% in the first quarter, and is poised to overtake Germany to become the third-largest economy with a projected GDP of $7.3 trillion by 2030, continuing economic growth and development as one of the fastest-growing economies in the world. 

India’s historical milestone in the global world’s fourth-largest economy. This shift marks a significant change in the global economic hierarchy. This shift marks a significant change in the global economy. India’s economic growth is driven by India’s resilient domestic demand and a consistent ‘Goldilocks’ economy, one of the fastest-growing economies with high growth coupled with stable inflation. India is now behind only the United States, China and Germany, with a current nominal GDP value at $4.18 trillion. 

Key Highlights:

The latest data from the Ministry of Statistics and Programme Implementation (MoSPI) and the Press Information Bureau (PIB) released several critical indicators of India's economic growth: 

Source: PIB 

Also read: ADB raised India's GDP growth forecast 7.2%, up from 6.5% for FY2026

1. Real GDP has been estimated to grow by 8.2% in the second quarter of financial year 2025-26, up from 7.8% in the first quarter.

2. Nominal GDP growth witnessed a growth rate of 8.7% in the second quarter of financial year 2025-26. 

3. India’s secondary and tertiary sectors show growth of 8.1% and 9.2%, respectively, which has significantly boosted the real GDP growth rate in the second quarter of financial year 2025-2026.

4. Financial, Real Estate & Professional Services (10.2%) in the tertiary sector has sustained a substantial growth rate at constant prices in Q2 of FY 2025-26.

5. Agriculture and Allied (3.5%) and Electricity, Gas, Water Supply and Other Utility Services Sector (4.4%) have seen moderated real growth rates during Q2 of FY 2025-26.

6. Real Private Final Consumption Expenditure (PFCE) has reported a 7.9% growth rate during Q2 of FY 2025-26 as compared to the 6.4% growth rate in the corresponding period of the previous financial year.

7. According to the MoSPI, the unemployment rate also stood at 4.7% in November 2025, which is the lowest in recent months, supported by a surge in Artificial Intelligence (AI), Machine Learning (ML) and manufacturing sectors. 

8. India also witnessed the increment in the merchandise exports to $38.13 billion in November 2025, led by electronics, pharmaceuticals and engineering goods. 

     World's Top Five Economies (2025 Estimates)

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What is India’s Vision 2030?

India is the fourth-largest economy globally, having a nominal GDP of approximately $4.18 trillion. The current projections from the  International Monetary Fund’s World Economic Outlook report and S&P Global suggest that India is on track to overtake Germany’s economy within the next 2.5 to 3 years. India's GDP is projected to reach $7.3 trillion by 2030, solidifying its economic position as the world's third-largest economy by 2030. The key driving growth is supported by 

• Strong Domestic Demand: Strong private consumption and resilient urban demand are the primary drivers of the Indian economy, due to one of the highest demographic dividends, with a population of 1.4 billion, which also possesses a massive productive workforce.

• Infrastructure and Manufacturing: India's infrastructure and manufacturing sector are also steadily showing growth in recent years, supported by government initiatives like Make in India and significant capital expenditure (CAPEX) to boost the industrial output. 

• According to the State of India’s Digital Economy, India’s digital economy is also rapidly growing, which is expected to account for nearly 20% of the GDP by 2029-30.

• Robust growth (9%) from the services sector contributes 55%, and moderate growth (3.5%) from agriculture contributes 16-18% to the GDP of India. 

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