India is likely to overtake Japan and Germany to become the third-largest economy by 2030, according to S&P Global Market Intelligence’s latest issue of Purchasing Managers’ Index (PMI).
At present, India is the world’s fifth-largest economy; the US is the world’s largest economy with a Gross Domestic Product (GDP) of $25.5 trillion; China is the second largest economy with a GDP size of about $18 trillion; Japan is third with a $4.2 trillion GDP; and Germany is at fourth place with a $4 trillion GDP.
Third Largest Economy by 2030
The report mentions that India’s GDP, measured in dollar terms, will rise from $3.5 trillion in 2022 to $7.3 trillion by 2030.
It highlights that India’s GDP had already surpassed those of the UK and France in 2022.
#India to surpass #Japan to become 2nd largest #economy in Asia by 2030: S&P Globalhttps://t.co/YXKFP3fwNy
— Economic Times (@EconomicTimes) October 24, 2023
It said, “After two years of rapid economic growth in 2021 and 2022, the Indian economy has continued to show sustained strong growth during the 2023 calendar year.”
“This rapid pace of economic expansion would result in the size of the Indian GDP exceeding Japanese GDP by 2030, making India the second largest economy in the Asia-Pacific region,” the report stated.
Additionally, it stressed that India’s GDP is expected to grow 6.2% - 6.3% in the fiscal year (FY) ending in March 2024, making it the fastest-growing major economy this fiscal year.
Increased FDI Inflows
The report mentions that India has become an increasingly attractive location for multinationals across various industries, with foreign direct investment (FDI) inflows reaching a new record high of $85 billion in FY 2021-22.
These FDI inflows have been boosted by large investments from global technology multinationals like Google and Facebook, with the computer software and hardware sector being the largest recipient of the FDI inflows.
In FY 2022-23, the US, Singapore, Mauritius and the UAE were the four top sources of FDI inflows into India, with the state of Maharashtra getting the largest share of FDI.
Middle Class, Demographic Dividend Driving Growth
The report highlights that a large and fast-growing middle class, which helps to drive consumer spending, a rapidly growing Indian domestic consumer market, and a sizeable Industrial sector have contributed to making India an important investment destination.
It also mentions that the favourable long-term growth outlook for the Indian economy is driven by a youthful demographic profile and rapidly rising urban household incomes.
https://t.co/brnzuchBNP
— Gokul Rajaram (@gokulr) October 25, 2023
Every trend line points to the next few decades being absolutely incredible for India.
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Furthermore, the report suggests that the country will be one of the most important long-term growth markets for multinationals in a wide range of industries, ranging from manufacturing industries, such as autos, electronics, and chemicals, to services industries, such as banking, insurance, asset management, health care, and information technology.
India’s Digital Transformation
The report mentions that India’s ongoing digital transformation will accelerate the growth of e-commerce, thereby attracting multinationals in technology and e-commerce to venture into the Indian market.
“By 2030, 1.1 billion Indians will have internet access, more than doubling from the estimated 500 million internet users in 2020.”
This change will also boost home-grown unicorns like online e-commerce platforms, logistics startups, and online grocers.