India has achieved a significant milestone by overtaking Japan to become the world's fourth-largest economy, with a gross domestic product (GDP) now standing at USD 4.18 trillion, as announced by the government on 30 December.

This development positions the nation firmly on a trajectory to surpass Germany and claim the third spot within the next 2.5 to 3 years, potentially reaching USD 7.3 trillion by 2030. The United States, China, and Germany remain the top three economies globally.

In a noteworthy diplomatic gesture, China has publicly hailed India's economic ascent. Spokesperson Yu Jing of the Chinese Embassy in India expressed delight on social media, stating that India's rise demonstrates "true strength comes from facing history honestly, learning from it, and taking responsibility for the future." This commendation arrives amid complex bilateral ties, underscoring a rare moment of positivity from Beijing.


India's economic momentum shows no signs of abating. Real GDP growth surged to 8.2 per cent in the second quarter of the 2025-26 fiscal year, up from 7.8 per cent in the first quarter and 7.4 per cent in the final quarter of the previous year. Robust private consumption has been the primary driver, providing resilience against global trade disruptions and geopolitical tensions.

International financial institutions echo this optimism with robust growth forecasts for India in 2026. The World Bank projects 6.5 per cent, Moody's anticipates 6.4 per cent, the International Monetary Fund (IMF) expects 6.6 per cent, the Organisation for Economic Co-operation and Development (OECD) forecasts 6.7 per cent, S&P Global Ratings predicts 6.5 per cent, the Asian Development Bank estimates 7.2 per cent, and Fitch Ratings sees 7.4 per cent expansion. These projections affirm India's status as one of the fastest-growing major economies.

The government's statement highlights India's strategic vision, positioning the country to attain high middle-income status by 2047—the centenary of independence. This ambition rests on solid foundations of sustained economic growth, structural reforms, and social progress. Key initiatives include digital infrastructure expansion, manufacturing incentives under the Production Linked Incentive scheme, and investments in renewable energy.

Surpassing Japan marks a pivotal shift in global economic rankings. Japan, long a powerhouse since the post-World War II era, has grappled with deflation, an ageing population, and stagnant growth, with its GDP hovering around USD 4.1 trillion. India's ascent reflects demographic dividends, a young workforce, and policy reforms that have unlocked entrepreneurial potential.

Private consumption, contributing over 60 per cent to GDP, has proven particularly resilient. Rising urban incomes, e-commerce penetration, and festive season spending have bolstered demand. Meanwhile, government capital expenditure on infrastructure—roads, railways, and ports—continues to crowd in private investments, creating a virtuous cycle of growth.

Global uncertainties, including supply chain disruptions and inflationary pressures, have tested India's mettle, yet strategic diversification of trade partners has mitigated risks. Exports in sectors like pharmaceuticals, information technology services, and gems have thrived, while imports of critical minerals for green technologies are being secured through new partnerships.

China's endorsement carries layered implications. While economic praise from Beijing is welcome, it occurs against a backdrop of border disputes and competition in the Indo-Pacific. Nonetheless, both nations share interests in multilateral forums like BRICS and the Shanghai Cooperation Organisation, where India's growth bolsters the Global South's voice.

Looking ahead, India's path to third-largest economy status hinges on sustaining reforms. Enhancing ease of doing business, skilling the workforce, and bridging regional disparities will be crucial. Ambitious targets in semiconductors, electric vehicles, and space technology promise to diversify the growth base beyond traditional services.

The 2030 projection of USD 7.3 trillion assumes average annual growth of around 8 per cent, aligning with historical trends. This would elevate per capita income significantly, though challenges like job creation for 10-12 million annual entrants to the workforce remain pressing.

India's economic narrative inspires emerging markets worldwide. By blending market-oriented policies with welfare measures—such as direct benefit transfers reaching over 800 million people—the country exemplifies inclusive growth. As it eyes 2047, the focus sharpens on innovation-driven prosperity.

Overtaking Japan is not merely a numerical triumph but a testament to India's transformative journey. With global acclaim and domestic resolve, the nation stands poised to redefine economic leadership in the 21st century.

Agencies