As of 2025, India stands as the world’s fourth-largest economy in nominal GDP terms, a remarkable achievement that places it behind only the United States, China, and Germany. Powered through the reforms of the government led by Prime Minister Narendra Modi in the last decade, India has now cemented itself in the top five economies of the world.

Surpassing established economic powers such as Japan and the United Kingdom, India’s ascent reflects a decade of strategic policymaking, economic reforms, and the collective resilience of its 1.4 billion citizens. This milestone is not merely a statistical triumph but a testament to India’s evolving role as a global economic anchor.

The Foundations of Economic Growth

India has pursued a trajectory of inclusive and sustainable growth. Initiatives such as “Make in India”, launched in 2014, have bolstered domestic manufacturing, attracting Foreign Direct Investment in sectors ranging from electronics to renewable energy. Similarly, the Digital India program has revolutionised the nation’s technological landscape, fostering a robust digital economy that ranks among the world’s most advanced.

A cornerstone of India’s digital transformation is the Unified Payments Interface (UPI), a real-time payment system that has streamlined financial transactions for millions of people. In 2024, UPI processed over 100 billion transactions annually, a feat that has drawn global admiration and emulation. Beyond digital payments, India’s telecommunications infrastructure, with widespread 5G adoption, has enabled seamless connectivity, empowering businesses and individuals alike. These advancements have positioned India as a leader in the global digital economy, with its technology sector contributing significantly to GDP growth.

Infrastructure development has been another critical driver. The Modi government’s investment in high-speed rail, modernised airports, and smart cities reflects a commitment to building a foundation for long-term prosperity.

The National Infrastructure Pipeline, with projects worth over $1.5 trillion, underscores India’s ambition to rival global standards. These efforts have not only enhanced domestic connectivity but also strengthened India’s appeal as a destination for international trade and investment.

The Power of a Youthful Workforce

At the heart of India’s economic success is its demographic advantage: a young, dynamic workforce with a median age of 28. The country’s startup ecosystem, one of the largest globally, has produced unicorns in Fintech, E-commerce, and Artificial Intelligence, rivalling innovation centres like Silicon Valley. Education and skilling initiatives have been pivotal in sustaining this momentum.

Furthermore, the increasing participation of women in the workforce, supported by policies promoting gender equity, has enriched India’s economic fabric. Rural areas, too, are benefiting from digital literacy programs, bridging the urban-rural divide and fostering inclusive growth.

India’s pharmaceutical sector, often dubbed the “pharmacy of the world,” exemplifies its global competitiveness. Supplying affordable generic medicines and vaccines to over 200 countries, the industry has solidified India’s reputation as a reliable partner in global health. During the COVID-19 pandemic, India’s rapid production of vaccines underscored its capacity to address global challenges, enhancing its soft power.

A Global Leader with Strategic Vision

India’s economic rise has amplified its influence in international affairs. As a leader of the Global South, India advocates for equitable representation in global governance, championing reforms in institutions like the United Nations and the World Bank. Its presidency of the G20 in 2023 showcased its ability to bridge divides between developed and developing nations, with a focus on climate action, digital inclusion, and economic resilience.

India’s commitment to sustainability is evident in its ambitious climate goals. The nation aims to achieve net-zero emissions by 2070, with 50% of its energy derived from renewables by 2030. Investments in solar and wind energy, coupled with initiatives like the International Solar Alliance, position India as a pioneer in green technology. Simultaneously, its space program, led by the Indian Space Research Organisation (ISRO), has achieved milestones such as the Chandrayaan-3 lunar landing, reinforcing India’s scientific prowess.

Trade and diplomacy further underscore India’s global stature. Strategic partnerships with nations across Asia, Europe, and the Americas have diversified its economic engagements. The Quad alliance, comprising India, the United States, Japan, and Australia, reflects India’s growing role in ensuring a free and open Indo-Pacific. Meanwhile, participation in regional frameworks like the ASEAN-India Summit enhances economic integration, with bilateral trade projected to reach $300 billion by 2030.

Implications for the Global Economy

India’s rise as the fourth-largest economy has profound implications for the world. Its vast market, with a growing middle class of over 600 million, offers unparalleled opportunities for trade and investment. Sectors such as technology, healthcare, and renewable energy are particularly attractive, with foreign direct investment inflows reaching $80 billion annually. India’s stock exchanges, among the world’s largest, draw global investors seeking high returns in a dynamic market.

Moreover, India’s emphasis on innovation positions it as a hub for Research and Development. Collaborations between Indian and international firms in Artificial Intelligence, Biotechnology, and Clean Energy are driving global advancements. The nation’s digital infrastructure, including its leadership in 5G and blockchain, facilitates cross-border partnerships, enhancing global connectivity.

India’s economic policies also promote stability in an uncertain world. By diversifying supply chains and reducing dependence on single markets, India contributes to global economic resilience. Its role in multilateral trade agreements and regional economic blocs fosters cooperation, countering protectionist trends. As a voice for developing nations, India advocates for fair trade practices and access to technology, reshaping global economic norms.

India’s journey to becoming the world’s fourth-largest economy is a narrative of vision, resilience, and transformation. From liberalising its markets to empowering its youth, India has laid a robust foundation for sustained growth. Its global leadership, rooted in principles of inclusivity and sustainability, positions it as a model for emerging economies under the Modi government.