S&P Global has projected that India would become the third largest economy in the world by 2030.

Based on IMF data, India is currently placed at the fifth slot with the size of its economy at over $3.7 trillion. The list has US (around $27 trillion) on top followed by China (around $17.7 trillion), Germany ($4.4 trillion) and Japan ($4.2 trillion).

Rapid expansion

“India is set to become the third largest economy by 2030, and we expect it will be the fastest growing major economy in the next three years,” S&P Global said in its Global Credit Outlook 2024 report titled, ‘New Risks, New Playbook.’ Earlier, S&P Global Market Intelligence had said that India‘s nominal GDP measured in USD terms is forecast to rise from $3.5 trillion in 2022 to $7.3 trillion by 2030. This rapid pace of economic expansion would result in the size of the Indian GDP exceeding Japanese GDP by 2030, making India the second largest economy in the Asia-Pacific region.

These remarks support the confidence expressed by Prime Minister Narendra Modi who has repeatedly said that India would soon be the third largest economy in the world.

In his address at 20 Years’ Celebration of Vibrant Gujarat Global Summit this September, the PM had said: “Now we are standing at a turning point where Bharat is going to become a global economic powerhouse. Now this is Bharat’s guarantee to the world and my guarantee to you too. You will see before your eyes; within a few years Bharat will be among the top 3 largest economies of the world. This is Modi’s guarantee.”

Meanwhile, according to the agency, a paramount test will be whether India can become the next big global manufacturing hub, an immense opportunity. Developing a strong logistics framework will be key in transforming India from a services-dominated economy into a manufacturing-dominant one. “Unlocking the labor market potential will largely depend upon upskilling workers and increasing female participation in the workforce. Success in these two areas will enable India to realise its demographic dividend,” it said.

It felt booming domestic digital market could also fuel expansion in India’s high-growth start-up ecosystem during the next decade, especially in financial and consumer technology. In the automotive sector, India is poised for growth, building on infrastructure, investment, and innovation. Overall, Mexico is not the only EM that could benefit from the reconfiguration of global-supply chains. “Countries with strong and stable trade ties with the US, such as Vietnam and India, are also gaining attention in this area,” it said.

The agency expects India to grow at 6.4 per cent during current fiscal which is 40 basis points higher that previous forecast. For FY25, the projected growth rate is also 6.4 per cent, but it us 50 basis points lower than earlier projection. Forecast for FY26 and FY27 are 6.9 and 7 per cent, respectively.