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India's Growth Propelled by Strong Reforms, Digital Push, Rising Investments: Report
India's GDP is expected to double from USD 2.1 trillion in 2015 to USD 4.2 trillion in 2025, making it the world's fourth-largest economy by 2025 end. Projections also indicate that by 2028, India will surpass Germany to become the world's third-largest economy.
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India, the world's fastest-growing major economy, propelled by strong reforms, infrastructure push, major digital initiatives, and rising investments, is positioned as a global powerhouse on track to become the fourth-largest economy in 2025, according a report by Rubix Data Sciences.
Prime Minister Narendra Modi also said at an event in Cyprus that India will soon become the third-largest economy in the world. "India is one of the biggest emerging economies. We have implemented tax reforms, Goods and Services Tax, rationalised corporate tax, decriminalised laws, and are focussing on 'trust of doing business', along with ease of doing business."
India's Gross Domestic Product (GDP) is expected to double from USD 2.1 trillion in 2015 to USD 4.2 trillion in 2025, making it the world's fourth-largest economy by the end of 2025. Projections also indicate that by 2028, India will surpass Germany to become the world's third-largest economy.
Retail inflation was down to a six-year low of 4.6 per cent in FY2025 and is expected to dip further; the Reserve Bank of India (RBI) has reduced its inflation forecast for FY2026 to 4 per cent. Fiscal deficit is set to decline from 4.8 per cent of GDP in FY2025 to 4.4 per cent in FY26, reinforcing the broader commitment to fiscal discipline and prudent macroeconomic management. All these factors put India on a positive growth trajectory.
India has firmly established itself as a leading global investment destination, with cumulative Foreign Direct Investment (FDI) inflows crossing the USD 1 trillion mark (April 2000 to December 2024), a testament to its strong economic fundamentals and investor-friendly policies.
In 2024, equity deals, including Initial Public Offerings (IPOs), hit a record USD 70 billion. Of this, about 75 per cent of the capital-funding IPOs were from domestic sources, a significant increase from just 25 per cent three years ago, the report said. In FY25, India's Unified Payments Interface (UPI), which handles an average of 580 million transactions daily, processed transactions worth INR 260.6 trillion, achieving a 59 per cent CAGR from FY21 to FY25.
Moreover, India has the third-largest startup ecosystem in the world. The number of Department for Promotion of Industry and Internal Trade (DPIIT) recognised startups grew from around 500 in 2016 to 1,59,157 (as of January 15, 2025).
India's IT-BPM sector aims to double its revenue to USD 500 billion by 2030 from about USD 250 billion currently, according to Rubix. India's export composition is led by IT services with a 53 per cent share; followed by software products at 25 per cent; BPM and Engineering and R&D (ER&D) at 22 per cent.
Deeptech Startup Ecosystem
India is harnessing its IT expertise to fuel the growth of deep tech startups working across critical domains such as defence, AI, quantum computing, semiconductors, and space technology, which are becoming central to India's ambition of achieving technological self-reliance and global competitiveness.
India has one of the world's largest tech startup ecosystems, with over 35,000 tech startups, including nearly 4,000 focused on deep tech innovation, indicating India's position as a rising global innovation hub. In 2024 alone, deep tech startups in India attracted USD 1.6 billion in funding, a 78 per cent increase over 2023. This surge demonstrates growing investor confidence in India's capability to build foundational technologies.
Seed and early-stage deep tech ventures captured over 35 per cent of the total tech startup funding, indicating strong support for emerging innovation at the grassroots level. Notably, 87 per cent of all tech funding was directed towards startups developing AI-driven solutions, emphasising AI's critical role in shaping future economic and industrial landscapes.
Further, the government has also embarked on major initiatives such as the National Quantum Mission (NQM) at a total cost of INR 60 billion from 2023- 24 to 2030-31 and the ambitious IndiaAI Mission to strengthen the AI innovation ecosystem by allocating INR 103 billion over five years. The Union Budget 2025-26's allocation of INR 5,000 million (USD 58 million) for a Centre of Excellence in AI for Education will put further focus on deep tech technology.
"India's economic outlook remains positive as it is poised to surpass Japan and become the fourth largest economy by the end of 2025, anchored by its proven resilience to external shocks over recent years. This resilience is expected to continue, supported by a broad-based recovery in capital expenditure, ongoing structural reforms, and rapid advancements in digital and physical infrastructure," the report said.
