India becomes fourth largest economy globally

March 12, 2026

India has surpassed Japan to become the world’s fourth-largest economy, highlighting the country’s strong growth momentum and rising influence in the global economic landscape.

Strong growth among major economies

Real GDP grew by 8.2% in Q2 FY 2025–26, the fastest rate among major economies. The International Monetary Fund (IMF) projects growth of 6.2% in 2026, while Goldman Sachs forecasts a stronger 6.9%, supported by resilient domestic consumption, relatively low inflation averaging 2.2% in 2025, and interest rate cuts of 125 basis points by the Reserve Bank of India.

With this momentum, India is widely expected to continue climbing the global economic rankings. Current projections suggest the country could become the world’s third largest economy by 2030, with GDP estimated to reach approximately USD 7.3 trillion.

Record foreign investment inflows

Foreign direct investment (FDI) continues to play a significant role in India’s economic expansion. In FY 2024–25, inflows reached a record USD 81.04 billion, representing a 14% year-on-year increase and pushing cumulative FDI since 2000 beyond the USD 1 trillion milestone.

These inflows reflect investor confidence in India’s long-term growth potential, supported by structural reforms, a large domestic market and expanding digital infrastructure.

India strengthens its position as the GCC capital

India has also emerged as the global hub for Global Capability Centres (GCCs). More than 2,100 GCCs now operate across the country, contributing approximately USD 64 billion to the economy and employing over two million professionals.

These centres increasingly support high-value functions including research and development, data analytics, technology services and financial operations, reinforcing India’s role within global corporate networks.

Trade agreements reinforce long-term investment outlook

The investment outlook received an additional boost with the announcement of a landmark EU–India Free Trade Agreement in January 2026. The agreement is expected to eliminate tariffs on more than 90% of traded goods, strengthening trade flows and deepening economic ties between India and Europe.

For international businesses, the agreement is likely to improve market access and supply chain integration between the two economies, while supporting investment in sectors such as manufacturing, technology and services.

Taken together, strong domestic demand, expanding technology capabilities and sustained foreign investment suggest India’s economic rise will remain a defining feature of the global economy in the coming decade.

Kreston Global firms in India are among the network’s largest presences worldwide, with more than 20 offices and around 450 professionals across the country, reflecting the scale and growing importance of the Indian market within the global business landscape.