India Surpasses Japan to Become World’s Fourth-Largest Economy
DID Press: India has officially surpassed Japan to become the world’s fourth-largest economy, with gross domestic product reaching USD 4.18 trillion, according to government figures and international media assessments. Analysts say India is now on track to rank third globally by 2028–2030, driven by rapid industrial expansion, rising exports, structural reforms, and relative macroeconomic stability.
Position in the global economy
Government data show India’s GDP reached USD 4.18 trillion in 2025, placing the country behind only the United States, China, and Germany.
Why India moved ahead of Japan
Sustained high growth: India has recorded the fastest growth among major economies in recent years. Real GDP growth reached 8.2 percent in the second quarter of fiscal year 2025–2026, the highest in six quarters.
Export momentum: Shipments of engineering goods, electronics, pharmaceuticals, and petrochemicals have risen sharply, with November exports hitting USD 38.13 billion.
Strong domestic demand: A young population and an expanding middle class continue to power consumption-driven growth.
Improving macro indicators: Inflation has eased into the government’s comfort range and unemployment has declined, according to official statements.
Japan’s slowdown: Japan faces demographic aging, weak productivity, prolonged stagnation, and currency depreciation—factors that have slowed its expansion relative to India.
Could India become the world’s third-largest economy?
Forecasts from government and international outlets project India’s GDP could reach USD 7.3 trillion by 2030, with some analysts saying the country may overtake Germany by 2028. Drivers include large-scale infrastructure investment, growth in technology, pharmaceuticals, and electronics manufacturing, rising foreign direct investment, and continued tax and digital reforms.
Challenges that could constrain progress
Despite strong momentum, India still confronts structural headwinds: persistent income inequality, high job-creation needs for millions of new labor-market entrants each year, infrastructure gaps in several states, and dependence on imported energy that leaves the economy exposed to price shocks.
Outlook
Economists describe this period as a pivotal moment. If current reforms and investment flows are sustained, India could consolidate its position as a leading global economic hub before the end of the decade.