India’s Economic Leap: On Course to Become the World’s Third-Largest Economy by 2028

India is entering a decisive phase in its economic journey. According to a recent SBI Research report, the country is projected to become the world’s third-largest economy by 2028, overtaking Germany, while also progressing towards upper-middle income status by around 2030. These projections highlight not just the rapid expansion of India’s GDP, but a broader transformation in income levels, consumption capacity, and global economic influence.

This upward trajectory reflects decades of structural reforms, rising domestic demand, demographic strength, and increasing integration with global markets. If sustained, it could redefine India’s position in the global economic order over the coming decade.

Notably, while India may take another four years to enter the upper-middle-income category, it is projected to become the world’s third-largest economy by 2028 and reach a $5 trillion gross domestic product (GDP) by 2027-28.(Photo: Reuters) | Business Standard

From Emerging Economy to Global Powerhouse

India’s economic rise has been remarkable in historical terms. It took nearly six decades after independence to reach a GDP of $1 trillion. The pace then accelerated sharply, with the economy crossing $2 trillion in 2014, $3 trillion by 2021, and surpassing the $4 trillion mark in 2025. Current projections suggest India could become a $5 trillion economy by 2027–28, firmly placing it among the world’s leading economic powers.

SBI Research estimates that by 2028, India’s GDP will exceed that of Germany, making it the third-largest economy globally, behind only the United States and China. This rise is being driven by strong domestic consumption, expanding manufacturing capacity, a thriving services sector, and large-scale public infrastructure investments.

Rising Incomes and the Shift to Upper-Middle Income Status

Beyond headline GDP numbers, the report places strong emphasis on per capita income growth. India became a lower-middle income country in 2007, and current projections indicate that it could reach upper-middle income status by around 2030, as defined by the World Bank.

Per capita Gross National Income is expected to approach the $4,000 mark by the end of this decade, moving closer to the upper-middle income threshold. This transition would signify a meaningful improvement in living standards, purchasing power, and economic security for millions of Indians, while also expanding the country’s middle-class base.

Growth Requirements and Economic Conditions

To sustain this trajectory, SBI Research notes that India will need to maintain nominal GDP growth of around 11.5 percent annually in dollar terms over the next two decades. While ambitious, this target is not unrealistic. India has achieved comparable growth rates during periods of strong global demand and domestic reform, particularly before the COVID-19 pandemic.

Continued policy stability, infrastructure development, private investment, and productivity improvements across sectors such as manufacturing, agriculture, and services will be essential. The report also aligns with broader national goals, including the government’s vision of transforming India into a developed economy by 2047.

Global Validation of India’s Growth Story

India’s growth outlook is echoed by several global financial institutions. Forecasts from Morgan Stanley, UBS, and IBEF also project India becoming the world’s third-largest economy by 2028. Meanwhile, the International Monetary Fund has consistently ranked India as the fastest-growing major economy, with growth rates significantly outpacing those of advanced nations.

This international recognition underscores confidence in India’s long-term fundamentals, including its demographic advantage, expanding consumer market, digital transformation, and resilience amid global economic uncertainty.

Challenges That Must Be Addressed

Despite strong momentum, the path ahead is not without challenges. Achieving upper-middle income and eventually high-income status will require sustained reforms to improve labour productivity, boost manufacturing competitiveness, and enhance human capital through education and skill development.

Income inequality, job creation, and workforce participation remain critical areas that will determine how inclusive India’s growth becomes. The ability to translate macroeconomic expansion into broad-based prosperity will be central to the success of this economic transition.

The MGMM Outlook

India’s projected rise to become the world’s third-largest economy by 2028 reflects a deeper structural transformation underway across income levels, consumption patterns, and productive capacity. The rapid acceleration from a $1 trillion economy to crossing the $4 trillion mark within little more than a decade underscores the impact of sustained reforms, strong domestic demand, infrastructure expansion, and the growing strength of manufacturing and services. The anticipated overtaking of Germany is not merely symbolic; it signals India’s emergence as a central pillar of global economic growth, driven largely by internal momentum rather than external dependence.

Equally significant is the expected shift toward upper-middle income status by around 2030, indicating tangible improvements in per capita income and living standards. This transition highlights the expanding middle class, rising purchasing power, and greater economic resilience, while also placing responsibility on policymakers to ensure growth remains inclusive. Maintaining high nominal growth will require continued policy stability, private investment, productivity gains, and focused improvements in human capital. If these conditions are met, India’s economic ascent can translate into broad-based prosperity and a more influential role in shaping the global economic order.

(Sources: LiveMint, Business Standard, Economic Times)