India overtakes Japan to become world’s fourth-largest economy

India has overtaken Japan to become the world’s fourth-largest economy with a GDP of USD 4.18 trillion and is expected to surpass Germany to take the third position by 2030, according to the Indian government.

India is also the world’s fastest-growing major economy, supported by strong growth numbers. The country’s real GDP grew by 8.2 percent in the second quarter of 2025–26, rising from 7.8 percent in the first quarter and 7.4 percent in the fourth quarter of the previous fiscal year.

“With GDP valued at USD 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 USD 7.3 trillion by 2030,” an Indian government release said while providing a snapshot of reforms in 2025.

The United States remains the world’s largest economy, followed by China in second place.

The government noted that growth momentum exceeded expectations, with GDP reaching a six-quarter high in the second quarter of 2025–26. This performance reflects India’s resilience despite ongoing global trade uncertainties. Strong domestic factors, especially robust private consumption, played a key role in driving this expansion.

The release added that several international agencies have shared a positive outlook for India’s economy. The World Bank has projected growth of 6.5 percent in 2026. Moody’s expects India to remain the fastest-growing G20 economy, with growth of 6.4 percent in 2026 and 6.5 percent in 2027.

The International Monetary Fund has raised its projections to 6.6 percent for 2025 and 6.2 percent for 2026, while the OECD forecasts growth of 6.7 percent in 2025 and 6.2 percent in 2026. S&P expects growth of 6.5 percent in the current fiscal year and 6.7 percent in the next. The Asian Development Bank has increased its 2025 forecast to 7.2 percent, and Fitch has raised its FY26 projection to 7.4 percent, citing strong consumer demand.

“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,” the government said.

The release also highlighted that inflation remains below the lower tolerance threshold, unemployment is declining, and export performance continues to improve. Financial conditions have remained stable, with strong credit flows to the commercial sector, while demand stays firm due to stronger urban consumption.