India Set to Overtake Japan as the World’s Third-Largest Economy by 2025

India’s economy is on track to surpass Japan’s, solidifying its position as the third-largest economy globally by 2025, according to recent projections by the International Monetary Fund (IMF) and economic experts. With sustained high growth rates, India is poised to play a critical role in the global economic landscape, marking a significant milestone in its development journey.

GDP Growth and Economic Milestones
India’s nominal GDP is expected to reach $4.339 trillion by the end of 2025, overtaking Japan’s $4.310 trillion. This achievement underscores India's rapid economic ascent, backed by robust industrial growth, infrastructural development, and a thriving service sector. Experts also anticipate India maintaining a growth rate of 6.5–7% through 2027, making it one of the fastest-growing economies among G20 nations.
The current fiscal year is expected to see India grow at an impressive 7%, the highest among G20 economies. This is a remarkable contrast to the anticipated global growth slowdown, with many large economies struggling to maintain a 3% growth rate.

India’s Growing Global Influence
Economic analysts credit India’s growth momentum to its demographic advantage, improving investment climate, and reforms in key sectors. A Japan Times article highlighted how India’s manufacturing sector and policy shifts are helping the country close the gap with developed nations like Japan. By 2026, India’s GDP is expected to far outpace several advanced economies, securing its position as a global economic powerhouse.
Markus Schilberg, a prominent economist, noted that India’s resilience in overcoming challenges, such as the pandemic and global economic headwinds, has set a strong foundation for its future. He added, “India is redefining the global economic order with its focus on technology, digital innovation, and inclusive growth.”

Challenges Ahead
While the outlook remains optimistic, challenges such as inflation, global trade tensions, and geopolitical uncertainties could impact growth. The Reserve Bank of India (RBI) and policymakers continue to monitor these risks closely to ensure stability and sustained growth.

The Path Forward
India’s remarkable economic trajectory underscores its growing stature in the world economy. As it prepares to surpass Japan, the focus remains on strengthening domestic industries, enhancing exports, and creating a more resilient economy. With these efforts, India is well-positioned to achieve its ambitious economic goals and cement its leadership in the global arena.