Before 2025 ended, India overtook Japan to become the world’s fourth-biggest economy, with officials hoping to pass Germany soon, according to the government’s end-of-year economic review.
Before 2025 ended, India overtook Japan to become the world’s fourth-biggest economy, with officials hoping to pass Germany within the next three years, according to the government’s end-of-year economic review. Data shows that India’s nominal gross domestic product (GDP) has reached $4.18 trillion, placing it in the fourth spot behind the United States, China and Germany.
The official confirmation, however, depends on data due in 2026 when final annual GDP figures are released, with the International Monetary Fund (IMF) figures indicating that India will cross over Japan this year. IMF projections for 2026 put India’s economy at $4.51 trillion, compared with Japan’s $4.46 trillion.
“India is among the world’s fastest-growing major economies and is well-positioned to sustain this momentum… 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 two-and-a-half to three years, with a projected GDP of $7.3 trillion by 2030,” the government’s recently released report, titled “2025: A Defining Year for India’s Growth”, said.
India’s upbeat assessment comes despite economic worries after Washington in August hit New Delhi with huge tariffs over its purchases of Russian oil. The government asserted that India’s continued growth reflects its “resilience amid persistent global trade uncertainties.”
India became the world’s fifth-largest economy in 2022, when its GDP overtook that of former colonial ruler Britain, according to IMF figures.
Key Areas Where India Needs To Work
In terms of population, India surpassed its neighbouring country, China, as the most populous nation in 2023. However, the US is the world’s largest economy, with China in second place and Germany in third.
India’s GDP per capita was $2,694 in 2024, according to the latest World Bank figures, 12 times smaller than Japan’s $32,487 and 20 times smaller than Germany’s $56,103.
More than a quarter of India’s 1.4 billion people are aged between 10 and 26, according to government figures, and the country needs to generate well-paid jobs for millions of young graduates.
India’s rupee hit a record low against the dollar in early December — having dropped around five per cent in 2025 — owing to ongoing worries about the lack of a trade deal with the US and the impact of the levies on the country’s goods.
The Growth Prediction
“As one of the world’s youngest nations, India’s growth story is being shaped by its ability to generate quality employment that productively absorbs its expanding workforce and delivers inclusive, sustainable growth,” the government added.
The World Bank has projected a 6.5 per cent growth in 2026; Moody’s expects India to remain the fastest-growing G20 economy with a growth of 6.4 per cent in 2026 and 6.5 per cent in 2027.
The IMF has raised its projections to 6.6 per cent for 2025 and 6.2 per cent for 2026; the OECD forecasts 6.7 per cent growth in 2025 and 6.2 per cent in 2026.
Also, S&P anticipates a growth of 6.5 per cent in the current fiscal year and 6.7 per cent in the next; the Asian Development Bank has lifted its 2025 forecast to 7.2 per cent; and Fitch has raised its FY26 projection to 7.4 per cent on stronger 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.
Prime Minister Narendra Modi this year unveiled sweeping consumption tax cuts and pushed through labour law reforms after economic growth hit a four-year low in the 12 months ended March 31.
