India has officially surpassed Japan to become the world’s fourth-largest economy, according to the International Monetary Fund (IMF). The country’s nominal Gross Domestic Product (GDP) is projected to reach \$4.187 trillion in 2025, slightly ahead of Japan’s estimated \$4.186 trillion . This milestone underscores India’s remarkable economic growth and its emergence as a significant global economic player.

Anand Mahindra, Chairman of the Mahindra Group, has lauded this achievement as a testament to India’s economic resilience and the ingenuity of its people. Reflecting on his time in business school, Mahindra noted that the prospect of India overtaking Japan seemed like an audacious dream. Today, that dream has materialised, marking a significant shift in the global economic landscape.

However, Mahindra cautioned that while this achievement is commendable, it should not be the end goal. He emphasised that India’s next leap must focus on improving per capita GDP, rather than merely surpassing other nations in total GDP. This perspective highlights the importance of equitable economic growth that benefits all citizens.

The IMF’s projections indicate that India is on a robust growth trajectory, with expectations to surpass Germany’s economy by 2027, reaching a GDP of \$5.07 trillion. By 2030, India’s economy is anticipated to be 20% larger than Germany’s, reaching \$6.8 trillion . This optimistic outlook is driven by factors such as robust private consumption, a youthful demographic, and ongoing structural reforms.

India’s service sector, encompassing IT, finance, and telecommunications, continues to be a significant contributor to GDP, bolstering economic growth. Additionally, reforms like the Goods and Services Tax (GST), digitalisation initiatives, and infrastructure development have enhanced economic efficiency and attracted foreign investment .

Despite these advancements, challenges remain. Weak private investment, widening skill gaps, and uneven job creation could pose hurdles to sustaining growth. Policy interventions in these areas will be crucial for maintaining momentum .

To ensure that economic growth translates into improved living standards for all, Mahindra advocates for sustained reforms in governance, infrastructure, manufacturing, education, and access to capital. He underscores the need for a collective effort from both the public and private sectors to create jobs and enhance employability, thereby harnessing the full potential of India’s demographic dividend.

What Anand Mahindra wrote:

“When I was in business school, the idea of India overtaking Japan in GDP felt like a distant, almost audacious dream. Today, that milestone is no longer theoretical — we’ve become the world’s fourth largest economy.

It’s no small achievement. Japan has long been an economic colossus, with legendary productivity and resilience. That we’ve caught up is a testament to the ambition and ingenuity of millions of Indians — across sectors, generations, and geographies.

But as we celebrate, we must stay dissatisfied.

Because India’s next leap must be in per capita GDP, not just overtaking Germany…

For us to keep Rising, India needs sustained economic reforms — in governance, infrastructure, manufacturing, education, and capital access.”