India’s economic growth trajectory continues to make global headlines, and according to NITI Aayog CEO B.V.R. Subrahmanyam, the country is poised to overtake Germany and Japan in terms of nominal GDP within the next three years. If this projection holds true, India will become the third-largest economy in the world by 2027, trailing only behind the United States and China.
The statement was made during a high-level policy forum on economic reforms and development, where Subrahmanyam highlighted the country’s strong macroeconomic fundamentals, expanding industrial base, digital transformation, and robust consumption trends as key drivers of this rapid ascent.
The Path of Consistent Growth
India is currently the fifth-largest economy in the world, having surpassed the United Kingdom in 2022. With a projected GDP growth rate of around 7% annually over the next few years, the Indian economy is expanding much faster than most developed economies, including Germany and Japan, which are growing at a far more modest pace.
According to the NITI Aayog CEO, India’s nominal GDP, which stands at approximately $3.7 trillion in 2024, could potentially cross the $5 trillion mark by 2027. In contrast, Japan and Germany, which are struggling with aging populations and sluggish growth, are expected to stagnate around the $4.5 to $5 trillion range during the same period.
“This is not just about numbers,” said Subrahmanyam. “It reflects India’s structural strength, our resilience in the face of global economic uncertainties, and the potential we are unlocking across multiple sectors—manufacturing, digital services, green energy, and infrastructure.”
Key Growth Engines
Several key sectors are fueling India’s meteoric economic rise. Among them:
- Manufacturing and Production: The ‘Make in India’ initiative, combined with the Production-Linked Incentive (PLI) schemes across sectors like electronics, pharmaceuticals, and automotive, has bolstered domestic production and exports.
- Digital Economy: India is witnessing exponential growth in digital payments, fintech, and e-commerce. The digital public infrastructure, particularly the Unified Payments Interface (UPI), has revolutionized how financial transactions are conducted in the country.
- Infrastructure Development: Massive investments in highways, railways, urban mobility, and logistics have improved connectivity and reduced supply chain inefficiencies, making India a more attractive investment destination.
- Green Energy Transition: With ambitious targets in renewable energy, India is rapidly positioning itself as a hub for green hydrogen, solar power, and sustainable mobility solutions.
Demographics and Market Potential
India’s demographic dividend remains one of its most significant advantages. With a median age of just under 29 years, the country has one of the youngest populations globally. This translates into a large, aspirational, and tech-savvy consumer base, as well as a growing labor force that can support industrial and service sector expansion.
“Demographics matter,” Subrahmanyam pointed out. “While the developed world is aging, India is still young. That energy, combined with the right policies, creates a powerful economic engine.”
India’s vast and diverse domestic market is also attracting global investors. Major multinationals have been shifting their supply chains toward India, further integrating the country into global value chains. The government’s consistent push for ease of doing business and reduction of regulatory burdens is facilitating this transition.
Caution and Balance
While the optimism is well-founded, Subrahmanyam also acknowledged that challenges remain. Issues such as income inequality, skilling the workforce, addressing climate change, and ensuring sustainable urbanization must be managed effectively to maintain long-term momentum.
He emphasized the importance of inclusive growth, stating, “Our goal is not just to become the third-largest economy by size, but also to ensure that the benefits of growth reach every Indian. That’s the real measure of success.”
Global Implications
India’s rise to the world’s top three economies will have significant global implications. It will enhance the country’s bargaining power in international forums like the G20, WTO, and climate negotiations. It may also shift global investment flows, policy alignments, and economic partnerships toward the Indo-Pacific region.
As global supply chains look to diversify away from China, India’s positioning as a democratic, stable, and reform-driven economy makes it an increasingly attractive option.
India’s projected leap to the third spot in global economic rankings is more than just a statistic—it symbolizes the nation’s evolving role in the international order. With continued reforms, strong leadership, and a focus on inclusive development, the next few years could mark a transformative chapter in India’s economic history.