India overtakes Japan to become world’s fourth-largest economy, government review says

The ranking will be confirmed in 2026, once the final annual GDP data is released

India has overtaken Japan to become the world’s fourth-largest economy by nominal GDP, according to the government’s year-end economic review.

According to the review, India now trails only the United States, China and Germany, and officials say it is on course to claim third place within the next few years if current trends hold.

The ranking will be confirmed in 2026, once the final annual GDP data is released.

“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,” according to the review, carried by the federal Press Information Bureau.

The government said real GDP expanded by 8.2 per cent in the second quarter of FY 2025-26, accelerating from 7.8 per cent in the first quarter and 7.4 per cent in the final quarter of FY 2024-25.

The uptick was driven by “resilient domestic demand amidst global trade and policy uncertainties”.

Export performance has improved as well, the review said, with merchandise exports rising to $38.13bn in November from $36.43bn in January, driven by growth in engineering goods, electronics, pharmaceuticals and petroleum products.

The GDP growth climbed to its strongest level in six quarters during the second quarter of FY 2025-26. “Domestic drivers-led by robust private consumption-played a central role in supporting this expansion,” the government said.

The government review states that ‘India is among the world’s fastest-growing major economies and is well-positioned to sustain this momentum’ (AFP/Getty)

“The World Bank projects 6.5 per cent growth in 2026; Moody’s expects India to remain the fastest-growing G20 economy with 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; S&P anticipates growth of 6.5 per cent in the current fiscal 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,” the release states.

It noted: “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 International Monetary Fund has indicated that India is likely to move ahead of Japan next year, while the Reserve Bank of India has raised its growth projection for the 2025–26 financial year to 7.3 per cent.

Earlier this year, BVR Subrahmanyam, chief of the Indian government’s public policy think tank Niti Aayog, told a televised press briefing that “we are the fourth-largest economy as I speak. We are a $4 trillion economy as I speak, and this is not my data. This is IMF data. India today is larger than Japan.”

He went on to claim that India was on course to displace Germany as the third-largest economy, placing it behind only the US and China, in about three years.

However, analysts at the time had urged caution even if this milestone was reached. They said it should not distract from the fact that there are deep-rooted socioeconomic issues and gaping disparities in the country.