India’s Ascent to the World’s 4th Largest Economy: Growth Anchored in Reform, Investment, and Infrastructure
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India becomes the world's 4th largest economy: A milestone worth contemplating
India has overtaken Japan to become the world's fourth-largest economy with a GDP of $4.19 trillion, according to data from the International Monetary Fund (IMF) quoted by NITI Aayog CEO BVR Subrahmanyam. This milestone is a testament to India's economic journey spanning decades of growth, reform, and resilience.
India's nominal GDP for the year 2025-26 stands at an estimated $4.187 trillion, according to the IMF's World Economic Outlook report published in April 2025, narrowly surpassing Japan's estimated $4.186 trillion. This jump places India third behind the world's economic ranks of the United States, China, and Germany.
Several major drivers are propelling India to the 4th rank among global GDP:
India's young and fast-expanding population has become a strong driver of demand. Growing incomes, urbanization, and the growth of digital platforms have fueled spending across segments—from FMCG to e-commerce and mobility. This robust domestic market shields India from global slowdowns and makes India an investment destination of choice.
India made structural reforms in the last decade, which are now yielding results. The Goods and Services Tax (GST) integrated the national market, the Insolvency and Bankruptcy Code enhanced credit discipline, and concerted efforts to simplify compliance under Income Tax, FEMA, the Companies Act, the Labour Codes, and SEBI regulations such as digitization of corporate filings, and faceless assessment under Income Tax, have all contributed to reducing hurdles and have enhanced the ease of doing business, boosting investor confidence. Digital reforms such as Aadhaar, UPI, and e-governance have improved transparency and efficiency in the economy.
As the global supply chains shift, India is becoming an increasingly attractive option to China for manufacturing and services. The Production-Linked Incentive (PLI) schemes for numerous sectors are attracting international companies to open in India. Indicative free trade agreements and ongoing bilateral relations are also assisting with integrating India further into global trading networks.
Subrahmanyam was hopeful of the course of India's future, saying that if things go according to plan and strategy, India would overtake Germany to become the third-largest economy in 2 to 3 years.
This achievement is more than just statistics; it's a reflection of India's resilience and capability. With this, we should celebrate while keeping inclusive growth in mind, so that economic growth spurs better standards of living for every citizen
Singapore Continues to Lead as India’s Top FDI Contributor in FY 2024–25
Singapore has continued to maintain its lead as India’s largest source of Foreign Direct Investment (FDI) for the seventh year in a row, contributing close to USD 15 billion in FY 2024–25. This marks a substantial share of India’s record-high total FDI inflow of USD 81.04 billion for the year, reinforcing the deep-rooted economic partnership between the two nations.
The consistent inflows are a reflection of Singapore’s strategic role as a global financial hub and a preferred jurisdiction for international fund routing into India. Experts attribute this trend to Singapore’s favorable tax treaties, regulatory ease, and its positioning as a gateway for institutional and long-term investors seeking exposure to India’s growth story.
Capital inflows from Singapore have been channeled into key sectors such as financial services, technology, infrastructure, renewable energy, and logistics sectors that align with India’s economic priorities and policy reforms. The India-Singapore Comprehensive Economic Cooperation Agreement (CECA) has further played an enabling role in strengthening cross-border investments and deepening trade and economic ties.
This development not only signals sustained investor confidence in India’s macroeconomic fundamentals but also highlights the increasing global appetite for participating in India’s expanding market. With ongoing structural reforms and a stable investment climate, the India–Singapore investment corridor is expected to see continued momentum in the years ahead.
Vizhinjam International Seaport: India's Maritime Leap Forward
India's maritime infrastructure is poised for a transformative shift with the inauguration of the Vizhinjam International Seaport in Thiruvananthapuram, Kerala. As the nation's first deep-water transshipment hub, Vizhinjam is set to redefine India's position in global trade.
Developed through a collaboration between Adani Ports and the Kerala state government, the project has a total investment of approximately INR 88.67 billion (US$1.05 billion). The construction is expected to be completed by 2028, with full operations commencing by 2034.
Strategic Advantages:
Situated just 10 nautical miles from the east-west international shipping corridor, Vizhinjam offers direct access to one of the world's busiest maritime trade routes, reducing detour times and fuel costs for global carriers.
With a natural sea depth of 24 meters, the port can accommodate Ultra Large Container Ships (ULCS) without extensive dredging, providing a competitive edge over regional ports like Colombo, Jebel Ali, and Singapore.
The port boasts India's deepest breakwater at 2,960 meters, rising as tall as a 9-story building, ensuring safe harbor conditions. High-capacity berths are designed to handle ships carrying up to 24,000 TEUs, aligning with global standards.
Vizhinjam's infrastructure integrates road and rail connectivity, including a planned railway tunnel, enhancing inland cargo movement across southern India. Its proximity to Trivandrum International Airport further augments its logistical advantages.
The operationalization of Vizhinjam is not merely a logistical advancement but a strategic move to support India's position in global trade. By reducing reliance on foreign ports for transshipment, India stands to gain economically while enhancing its geopolitical influence in maritime affairs.
India’s Manufacturing Momentum: Seizing the Moment in a Changing Global Landscape
As global trade dynamics evolve, India is emerging as a resilient and attractive hub for manufacturing. A recent S&P Global report highlights India's proactive measures to enhance its manufacturing appeal to global investors.
Key Highlights:
India's strategic positioning and policy interventions pave the way for sustained growth in the manufacturing sector. As supply chains diversify globally, India stands poised to capitalize on emerging opportunities.