Sunday, 19 October 2025
India is approaching a historic inflection point. With the world’s major economies — from China to the United States — contending with aging populations and slowing growth, India is emerging as one of the few large nations where demographics, industrial momentum, and global positioning still align in its favor. Yet the country’s path to becoming a global power will depend on whether it can balance these opportunities with deep-rooted structural challenges.
India’s economy continues to expand faster than any other major nation. According to the IMF’s October 2025 outlook, India’s GDP is expected to grow 6.6% in FY26, supported by domestic consumption and steady government investment. Nominal GDP is projected at $4.13 trillion, placing India just behind Japan, with analysts expecting it to overtake by 2027.
Key growth pillars include a renewed manufacturing push and an expanding export base. In the first quarter of FY26, electronics exports surged 47% year-on-year, driven by mobile device production under the government’s Production Linked Incentive (PLI) scheme. Officials aim to create a $500 billion electronics ecosystem by 2030. India also climbed to 38th place in the World Bank’s Logistics Performance Index, with the goal of cutting logistics costs below 10% of GDP, a step seen as critical to export competitiveness.
In the energy sector, India has reached roughly 50% non-fossil capacity in power generation, five years ahead of its Paris Agreement target. However, with 85% of crude oil still imported, the country remains vulnerable to energy shocks and volatile global prices — an imbalance policymakers are determined to address through renewables and biofuel expansion.
Demographics remain India’s most powerful advantage — and its biggest test. With a median age of just 28.8 years, the country’s workforce continues to expand as others shrink. The female labour participation rate has risen to 41.7%, the highest in nearly a decade, according to the Periodic Labour Force Survey, yet women still make up less than half of the active workforce.
Urbanization is reshaping the country’s social and economic map. More than one in three Indians now lives in a city, and the urban share is expected to reach 50% by 2047, when India marks a century of independence. Sectors such as construction, digital services, and green infrastructure are likely to absorb much of this labour shift — if supported by sufficient investment in education, healthcare, and housing.
India’s external partnerships reflect a mix of economic diplomacy and digital influence. Its Unified Payments Interface (UPI) — now linked with Singapore, Mauritius, and Sri Lanka — has become a template for interoperable digital finance across developing economies. The government is also negotiating free trade agreements with the EU, the UK, and South American nations, while deepening strategic ties with Japan, France, and the U.S.
Discussions within BRICS have focused on greater use of local currencies in trade, though member states have ruled out the idea of a common BRICS currency for now. Meanwhile, defence exports reached a record $2.7 billion in FY2025, signalling international confidence in India’s growing defence manufacturing base.
While optimism runs high, challenges remain. Bureaucratic hurdles, slow land reforms, and infrastructure bottlenecks continue to test investors’ patience. Economists also warn that sustained growth above 7% will require deeper reforms — including higher female workforce participation, a broader tax base, and more efficient governance.
Still, India’s trajectory remains stronger than most. The World Bank recently described the country as a “pillar of stability in a turbulent global economy,” while S&P Global forecasts consistent medium-term growth around 6.5%. With urban expansion, an emerging middle class, and accelerating industrial diversification, India is redefining what sustainable growth looks like in the 21st century.
If it can convert its demographic and economic promise into productivity and institutional strength, India will not just be the fastest-growing major economy — it will be a global power built on its own terms.
Disclaimer: This article draws on data from the IMF, World Bank, World Bank Logistics Index, India’s PLFS, and multiple government releases as of October 2025. Figures are approximate and subject to official revision.
