India, currently positioned as the world's fifth-largest economy, is on track to surpass Japan and claim the title of the world's third-largest economy by 2030, reaching a GDP of $7.3 trillion, as per the latest PMI report by S&P Global Market Intelligence.
Following impressive economic growth in 2021 and 2022, India's economy has maintained its momentum throughout 2023, the report said.
Growth projections for 2024
India's GDP is projected to grow by 6.2-6.3% in the fiscal year ending March 2024, making it the fastest-growing major economy for the year. Notably, the economy experienced a remarkable 7.8% growth in the April-June quarter of 2023.
S&P Global emphasized the continued rapid expansion expected for the rest of 2023 and into 2024, driven primarily by robust domestic demand.
Comparative global standings
By 2022, India's GDP had already surpassed that of the UK and France. By 2030, it is also anticipated to overtake Germany. Currently, the US holds the position of the world's largest economy with a GDP of $25.5 trillion, followed by China with about USD 18 trillion. Japan and Germany trail with GDPs of $4.2 trillion and $4 trillion, respectively.
Key growth drivers and digital transformation
India's economic growth is fueled by its burgeoning middle class, which is significantly boosting consumer spending. The nation's vast consumer market and industrial sector are attracting a plethora of multinational corporations across various sectors.
Furthermore, the ongoing digital transformation in India is set to reshape the retail consumer market landscape in the coming decade. S&P Global highlighted that by 2030, approximately 1.1 billion Indians will have internet access, a significant leap from the 500 million users in 2020.
This digital shift is expected to benefit home-grown companies like Mensa Brands, Delhivery, and BigBasket.
Foreign direct investment and future prospects
The past five years have seen a surge in FDI inflows to India, a trend that remained strong even during the pandemic years of 2020-2022. Major global tech corporations, including Google and Facebook, have been drawn to India's expansive and rapidly growing domestic consumer market.
The report concludes that India is poised to remain one of the world's fastest-growing economies over the next decade, making it a pivotal growth market for multinationals across various sectors.