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India, currently the fourth largest economy globally, is poised to potentially surpass Japan, becoming the third-largest economy worldwide by 2030, according to a recent report from S&P Global Market Intelligence.

After experiencing substantial economic growth in 2021 and 2022, India’s economy has demonstrated continued robust growth throughout the 2023 calendar year.

Projections suggest India’s Gross Domestic Product (GDP) is likely to expand by 6.2-6.3 percent during the fiscal year ending in March 2024, positioning it as the fastest-growing major economy during this fiscal year. The nation, ranked as Asia’s third-largest economy, exhibited impressive growth at 7.8 percent in the April-June quarter.

S&P Global anticipates ongoing rapid expansion for the short term in 2023 and throughout 2024, primarily due to strong domestic demand.

India’s attractiveness to foreign direct investment has increased significantly over the past decade, driven by the country’s favorable long-term growth prospects, characterized by a youthful demographic profile and the rapid rise of urban household incomes.

The forecast for India’s nominal GDP, measured in USD terms, predicts substantial growth from $3.5 trillion in 2022 to $7.3 trillion by 2030. This accelerated economic expansion is expected to surpass Japan’s GDP by 2030, positioning India as the second-largest economy in the Asia-Pacific region. By 2022, India’s GDP had already exceeded that of the UK and France, and by 2030, it is projected to surpass Germany as well.

The United States presently holds the position of the world’s largest economy with a GDP of $25.5 trillion, constituting a quarter of the global GDP. China follows as the second-largest economy, with a GDP of approximately $18 trillion, representing nearly 17.9 percent of the world’s GDP. Japan stands as the third-largest economy, with a GDP of $4.2 trillion, followed by Germany with a GDP of $4 trillion.

S&P Global identifies several key drivers supporting India’s long-term economic outlook. The substantial and rapidly growing middle class in India plays a pivotal role in propelling consumer spending. The expanding domestic consumer market in India, coupled with its significant industrial sector, makes it an increasingly attractive investment destination for various multinational companies across manufacturing, infrastructure, and services sectors.

The ongoing digital transformation in India is expected to accelerate the growth of e-commerce, transforming the retail consumer market landscape over the next decade. Leading global technology and e-commerce companies are showing increased interest in the Indian market.

By 2030, it is anticipated that 1.1 billion Indians will have internet access, more than doubling the estimated 500 million internet users in 2020. The rapid expansion of e-commerce and the adoption of 4G and 5G smartphone technology are expected to boost the success of domestic companies like online e-commerce platform Mensa Brands, logistics startup Delhivery, and the fast-growing online grocer BigBasket.

The substantial increase in foreign direct investment (FDI) inflows into India over the past five years continues, displaying strong momentum even during the pandemic years from 2020 to 2022.

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