India overtakes Japan to become world’s 4th largest economy as GDP values at $4.18 trillion

India has surpassed Japan to become the world’s fourth-largest economy in nominal GDP terms, according to the government’s year-end economic review.

Shortly, the economy is set to overtake Germany to become the third largest after the US and China.

All about India moving past Japan to become world’s fourth largest economy

A final confirmation will depend on the data released by the International Monetary Fund (IMF) in the first half of 2026, when the final figures for 2025 will be released.

“With GDP valued at $4.18 trillion, India has surpassed Japan to become the world’s fourth-largest economy and is poised to displace Germany from the third rank in the next 2.5 to 3 years with projected GDP of $7.3 trillion by 2030,” the government release said.

India has been one of the world’s fastest-growing major economies for several years now.

IMF forecasts India’s economy to be valued at $4.51 trillion in 2026, slightly above Japan’s projected $4.46 trillion.

India’s real GDP grew by 8.2% in the second quarter of FY 2025-26, increasing from 7.8% in the preceding quarter and 7.4% in the final quarter of FY 2024-25.

This growth was driven by strong domestic demand, even as global trade and policy uncertainties persisted.

Real gross value added surged 8.1%, because of strong performance in the industrial and services sectors.

The Reserve Bank of India increased its growth projection for FY 2025-26 to 7.3%, up from 6.8% earlier.

“Ongoing reforms are likely to further enable growth prospects. The present macro-economic situation presents a rare ‘goldilocks period’ of high growth and low inflation,” the review said.

CPI inflation stood at 4.26% in January and slowly moderated over the first half of the year, before falling further to multi-year lows during the latter half.

“India’s growth outlook remains buoyant, with global and domestic institutions upgrading their assessments on the back of strong economic fundamentals. Reflecting broad-based momentum across key sectors, the Reserve Bank of India revised its GDP growth projection for FY 2025–26 upward from 6.8% to 7.3%,” the review said.

Also read: Zepto clocks ₹17,000 crore in user savings, completes a 48-second delivery in 2025, Gurugram user tips ₹54,000 to delivery partners (startuppedia.in)