Explained: How India Rose to Become the World’s Fourth-Largest Economy

India has overtaken Japan to become the world's fourth-largest economy, with a nominal GDP of approximately USD 4.18 trillion in 2025. It now ranks behind the US, China, and Germany. 

India has overtaken Japan to become the world’s fourth‑largest economy, based on nominal Gross Domestic Product (GDP) estimates for 2025, according to the government’s end‑of‑year economic review. The country’s GDP is valued at approximately USD 4.18 trillion, placing it ahead of Japan and behind only the United States, China, and Germany in global rankings.

This milestone reflects India’s strong and sustained economic growth, which the government has attributed to a combination of domestic drivers. In 2025, India experienced a period often described as a “Goldilocks” phase - characterised by high GDP growth alongside low inflation - which helped bolster economic activity despite global uncertainties. Real GDP growth accelerated to 8.2% in the second quarter of the 2025‑26 fiscal year, a six‑quarter high, supported by robust private consumption and stable macroeconomic conditions.

The faster expansion was underpinned by healthy domestic demand, strengthening exports, and resilient industry and services sectors. The government also highlighted improvements in financial conditions, declining unemployment, and strong credit flows to business as factors reinforcing economic momentum.

International financial institutions have echoed positive growth prospects for India. The International Monetary Fund (IMF) raised its growth projections for India to 6.6% in 2025 and 6.2% in 2026, while organisations like the World Bank and OECD also forecast above‑average expansion, reinforcing expectations that India will maintain its rapid growth trajectory.

India’s rise in global rankings also stems from long‑term structural reforms and policy measures aimed at supporting investment, consumption, and export competitiveness. Cumulative progress over years has helped India move up from the fifth position to fourth place in nominal GDP terms, reflecting its growing economic influence on the world stage.

Looking ahead, the government projects that India could surpass Germany to become the third‑largest economy by around 2030, with forecasts suggesting a nominal GDP of around USD 7.3 trillion by then. These projections hinge on the continuation of strong growth trends, ongoing reforms, and stable macroeconomic conditions.

Overall, India’s elevation to the fourth spot in the global economy represents a significant achievement tied to robust growth performance, favourable economic conditions, and sustained progress in key economic indicators.