- | 5:30 pm
India stakes claim to fourth spot in global GDP rankings
New Delhi pegs the economy at $4.18 trillion and sees a path to overtaking Germany
India has become the world’s fourth-largest economy in nominal GDP terms after surpassing Japan, the government said, describing 2025 as a “Goldilocks” phase of strong growth and easing inflation that could put the country on track to overtake Germany within the next few years.
In a year-end note, the Press Information Bureau said India’s gross domestic product (GDP) was valued at $4.18 trillion and argued the economy 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.
Because global rankings typically rely on comparable cross-country datasets, the government’s claim is best read alongside International Monetary Fund (IMF) estimates.
The IMF’s DataMapper estimates put Japan’s 2025 nominal GDP at about $4.28 trillion, compared with roughly $4.13 trillion for India, underscoring how closely matched the two economies are and how rankings can shift with exchange-rate movements and data revisions.
A Japanese broadcast report citing IMF projections similarly described India as edging past Japan on nominal GDP, while noting the sensitivity of the comparison to methodology and timing.
The nominal-GDP race is not only about real growth. Japan’s growth outlook and exchange-rate dynamics have been central to the country’s recent slippage in dollar terms, analysts said.
The rapid decline in Japan’s nominal GDP in dollar terms is due in part to the impact of the weak yen. As the yen continues to weaken against the dollar, Japan’s nominal GDP in dollar terms will shrink, Takahide Kiuchi of Nomura Research Institute said in a recent research note.
Growth and easing inflation
The PIB note said India’s economy is showing resilience despite global trade headwinds. Real GDP growth rose to a six-quarter high of 8.2% in the July–September quarter of FY26, up from 7.8% in the previous quarter. Real gross value added increased 8.1%, supported by expansion in industry and services.
It also highlighted a fall in the unemployment rate to 4.7% in November from 5.2% in October, and said Consumer Price Index (CPI)-based inflation “progressively softened” to 0.71% in November from 4.26% in January.
Merchandise exports rose to $38.13 billion in November, compared with $36.43 billion in January, reflecting steady external demand even as global trade conditions remain uneven.
Officials said strong credit growth to businesses, rising urban consumption, and public investment in infrastructure continue to support domestic demand.
The government attributed the expansion to a combination of tax reforms, including changes to income tax and GST, lower crude oil prices, and increased capital spending on infrastructure and large projects. Supportive monetary conditions, easier access to credit, and subdued inflation have also helped sustain activity.
Looking ahead, favorable agricultural prospects, resilient corporate and financial-sector balance sheets, and steady services exports are expected to underpin growth. Faster trade and investment agreements could add further momentum.
India has continued to expand trade ties with partners including the UK, Oman, New Zealand, the UAE, Australia, and the EU, while trade with China, Hong Kong, Brazil, Italy, France, Belgium, and Germany has also increased, despite higher tariffs in some markets.
Services exports, a long-standing strength, rose 8.65% to $270.06 billion between April and November, from $248.56 billion a year earlier, led by computer and business services, according to the Ministry of Finance.
The Reserve Bank of India recently raised its GDP growth forecast for FY26 to 7.3%, up from 6.8%, citing broad-based momentum across sectors.
Growth projections from the World Bank, OECD, Moody’s, and the IMF range between 6.2% and 6.7% for the next two years, keeping India the fastest-growing major economy in the G20.
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