New Delhi — India has officially overtaken Japan to become the world’s fourth-largest economy, according to fresh GDP figures released by the International Monetary Fund (IMF). The development marks a significant economic shift in Asia and globally, as India continues to ascend at a faster-than-expected pace, challenging long-standing economic hierarchies and redefining its global economic stature.
In the April 2025 edition of the World Economic Outlook, the IMF forecasted this possibility. That projection has now materialized. The updated data lists India’s Gross Domestic Product at USD 4.187 trillion, surpassing Japan’s GDP of USD 4.186 trillion. This milestone places India just behind the United States, China, and Germany.
The United States remains at the top with a GDP of USD 30.507 trillion, followed by China at USD 19.231 trillion, and Germany at USD 4.744 trillion. The United Kingdom, with a GDP of USD 3.839 trillion, now holds the fifth position, while Japan slips to the fourth.
Economic Growth Surpassing Projections
India’s achievement comes earlier than projections by major financial institutions, including EY and Morgan Stanley, which had forecast this overtaking to occur between 2026 and 2027. According to a recent EY report titled “India — Towards Becoming the Third Largest Economy in the World”, India was expected to surpass both Japan and Germany by 2027 in nominal GDP terms. However, with this latest development, the Indian economy has exceeded those timelines by nearly two years.
The Morgan Stanley forecast, published in March 2025, had predicted India to reach USD 4.7 trillion in GDP by 2026, eventually climbing to USD 5.7 trillion by 2028. In that projection, India was supposed to overtake Japan in 2026. With this milestone now already achieved in the first half of 2025, India’s economic momentum is clearly outpacing earlier forecasts.
Fastest Growing Major Economy
India is now recognized as the fastest-growing major economy in the world, a status confirmed by multiple global institutions. According to IMF and World Bank projections, India will continue to lead global growth over the next several years. The country’s compound annual growth rate (CAGR) stands out distinctly.
Between 2022 and 2028, India is projected to have a CAGR of 8.7% in nominal GDP and 8.5% in Purchasing Power Parity (PPP) terms, according to EY. This growth trajectory outstrips China’s nominal GDP CAGR of 7.2% and PPP growth of 6.5%, and significantly exceeds the United States’ nominal growth rate of 4.1% during the same period.
Strong Performance in PPP Rankings
India is already the third-largest economy in the world by PPP metrics, behind only China and the United States. In PPP terms, which consider the relative cost of living and inflation rates, India has added nearly USD 7.5 trillion in economic output since 2022 — a figure comparable to Japan’s entire current annual PPP output.
EY’s projections further indicate that by 2027, India’s PPP economy will narrow the gap with China, with the difference in global economic output share shrinking by two percentage points. By 2028, the U.S. economy is expected to be just 1.7 times larger than India’s, down from significantly higher multiples a decade ago.
Structural Reforms and Policy Initiatives Fueling Growth
This economic transformation has not occurred in a vacuum. India’s rapid GDP growth is being driven by structural reforms, infrastructure development, technological adoption, and a burgeoning domestic consumption base. Since 2014, the government has pursued a series of reforms aimed at improving ease of doing business, enhancing digital infrastructure, and increasing manufacturing capacity through initiatives like Make in India and Atmanirbhar Bharat.
Prime Minister Narendra Modi’s administration has also articulated a bold vision for the economy, aiming to make India a developed country by 2047, coinciding with the centenary of Indian independence. That roadmap includes a target GDP size of USD 35 trillion, which would represent a near tenfold increase from the current level.
Global Confidence in India’s Growth Trajectory
Global economic agencies continue to express strong confidence in India’s economic outlook. The IMF described India as the “only bright spot” in an otherwise pessimistic global economic landscape, citing its strong domestic demand, policy stability, and demographic dividend as key enablers of growth.
Similarly, the World Bank has reiterated its optimistic view. In February 2025, World Bank India Country Director Auguste Tano Kouame described India as “the shining light in the world,” stating that its growth prospects remain strong even amid global economic uncertainties. This sentiment was echoed again in the United Nations’ World Economic Situation and Prospects (WESP) report, released on 15 May 2025, which highlighted that India remains the only economy demonstrating consistent upward momentum.
Growth Outpacing Other Major Economies
The following data from the EY forecast (2022–2028) outlines the CAGR of key economies:
- India: Nominal GDP CAGR – 8.7%, PPP GDP CAGR – 8.5%
- China: Nominal – 7.2%, PPP – 6.5%
- United Kingdom: Nominal – 5.6%, PPP – 3.7%
- United States: Nominal – 4.1%, PPP – 4.1%
- Japan: Nominal – 4.0%, PPP – 3.0%
- Germany: Nominal – 3.6%, PPP – 3.5%
India’s growth rate significantly exceeds that of its peers, reaffirming its position as a global growth leader.
Future Milestones: On Track to Become Third-Largest Economy
With the current pace of expansion, India is expected to surpass Germany in the next two to three years to become the world’s third-largest economy in nominal GDP terms. According to Morgan Stanley, this shift is expected by 2028, with India’s GDP projected to hit USD 5.7 trillion by then. However, the early overtaking of Japan suggests that even this timeline might be conservative.
India’s share in global GDP, currently at 3.5%, is projected to climb to 4.5% by 2029, increasing the country’s influence in global economic governance, trade negotiations, and strategic forums like the G20.
Policy Implications and Global Standing
India’s rise to the fourth spot brings geopolitical and strategic implications as well. As the global economic order undergoes a realignment, India’s enhanced stature will inevitably translate into greater diplomatic clout, more weight in multilateral forums, and deeper integration in global value chains.
The government’s continued focus on fiscal consolidation, monetary stability, and export competitiveness will be crucial in sustaining this growth. Initiatives such as the Production-Linked Incentive (PLI) scheme, Digital India, and the expansion of logistics infrastructure are expected to further boost economic productivity and attract foreign direct investment.
India’s overtaking of Japan to become the world’s fourth-largest economy marks more than just a shift in statistical rankings. It reflects the country’s growing economic capacity, consistent policy execution, and a demographic advantage that fuels sustained consumption and investment. As projections continue to be revised upward, India is firmly on track to redefine global economic dynamics and assert itself as a central player in the 21st-century economy.
