India: On Track to Become the World’s #3 Economy

India’s growth story is unprecedented.

It has the fastest-growing major economy in the world—GDP grew 8.4% in the final quarter of 2023, according to data released last week. Many analysts expect it to pass Germany and Japan to become the world’s third-largest economy. Deloitte South Asia CEO Romal Shetty thinks that will happen by 2027.


Much of this growth stems from favorable demographics. Last year, India surpassed China to become to the largest nation by population. It’s also the only top-five economy that’s young—40% of people there are under age 25. And India will stay relatively young because it’s the only top-five economy where births exceed the replacement rate.

EM to DM in 25 Years

India’s Prime Minister, Narendra Modi, wants to turn India into a developed country “within the next 25 years.” That is ambitious, but not implausible.

Modi, who’s up for reelection this year, has been opening the economy to foreign investment since he came to power in 2014. Foreign direct investment reached $71 billion for the 2022–23 financial year, and India’s information technology minister says they’re targeting $100 billion in annual FDI “in the next few years.”