The Government of India on Monday (December 29) announced via a press release that the country has now overtaken Japan to become the world’s fourth-largest economy. With a gross domestic product (GDP) valued at $4.18 trillion, India now ranks behind only the United States, China and Germany in terms of economic size.
The government said India is also the fastest-growing major economy globally and is on track to overtake Germany to become the world’s third-largest economy within the next three years. According to official government projections, India’s GDP could rise to about $7.3 trillion by 2030.
“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,” the Press Information Bureau release said.
Accelerated GDP growth
The announcement comes amid strong domestic economic performance. The government said real GDP growth accelerated to 8.2% in the second quarter of FY 2025-26, up from 7.8% in the first quarter and 7.4% in the final quarter of FY 2024-25. The expansion marked a six-quarter high and was driven largely by resilient domestic demand, even as global trade and policy uncertainties persist.
“Domestic drivers, led by robust private consumption, played a central role in supporting this expansion,” the release said. Strong household spending, improving investment sentiment and steady services-sector performance helped offset external headwinds.
Revised growth projections
Reflecting the improved outlook, the Reserve Bank of India has revised its GDP growth projection for FY 2025-26 upward, from 6.8% to 7.3%. Several international agencies have also maintained a positive view on India’s growth prospects.
The World Bank has projected 6.5% growth in 2026, while Moody’s expects India to remain the fastest-growing G20 economy, with growth of 6.4% in 2026 and 6.5% in 2027. The International Monetary Fund has raised its projections to 6.6% for 2025 and 6.2% for 2026. Other agencies, including the OECD, S&P, the Asian Development Bank and Fitch, have similarly revised their forecasts upward, citing strong consumer demand and macroeconomic resilience.
The government said these projections underline India’s growing role in the global economy, supported by domestic reforms, consumption-led growth and improving investor confidence.