India

India became the world's fourth-largest economy in mid-2025, surpassing Japan with nominal GDP of $4.18 trillion. The IMF projects displacement of Germany for third position by 2030, when Indian GDP may reach $7.3 trillion. These numbers mark the culmination of transformations that began with independence in 1947—and reveal how much transformation remains incomplete.

The partition of British India killed over a million people and displaced 15 million more. The new republic inherited colonial infrastructure designed for extraction, mass poverty, and the "license raj" bureaucracy that would constrain enterprise for decades. Jawaharlal Nehru's socialist-influenced development strategy emphasized heavy industry and import substitution while agriculture's share fell from 52% of GDP in 1951 to 15% today—yet farming still employs more workers than any other sector.

The 1991 balance-of-payments crisis forced liberalization. Deregulation, privatization, and trade opening unleashed growth that averaged over 6% annually for three decades. Services led: information technology exports exploded as American and European companies outsourced software development and business processes to Bangalore, Hyderabad, and Pune. Today services contribute 55% of GDP; the technology sector alone generates $282.6 billion in revenue, with over 1,700 global capability centers employing nearly two million skilled professionals.

India's digital economy—estimated at $402 billion in 2022-23 or 11.74% of GDP—may reach 20% by 2030. Mobile payments via UPI processed billions of transactions; Aadhaar biometric identification enabled direct benefit transfers that reduced corruption and leakage. This digital infrastructure represents a genuine Indian innovation with global applicability.

Manufacturing remains the persistent gap. Despite accounting for 3.2% of global manufacturing output (fifth-largest), manufacturing contributes only 15% of GDP and hasn't absorbed the labor force that services cannot employ. The "China Plus One" strategy has brought Apple, Samsung, and Foxconn production, with early iPhone 17 manufacturing shifting to India in 2025. But structural barriers—land acquisition, labor laws, infrastructure deficits, regulatory complexity—prevent manufacturing from replicating the services sector's success.

Real GDP grew 8.2% in Q2 FY2025-26, among the world's fastest major economy growth rates. Projections suggest 6.2-6.7% annual growth through 2028. India aims for high middle-income status by 2047, the centenary of independence. The demographic dividend—a young, growing workforce—provides potential labor supply that aging competitors lack.

Yet inequality and underemployment threaten this trajectory. Education systems underinvest in primary and secondary levels; higher education produces graduates whose skills misalign with employer needs. Job creation lags workforce growth. The structural imbalance traces to post-independence policies that prioritized capital-intensive growth over labor-intensive manufacturing—a path dependency that reforms have moderated but not overcome.

By 2026, India will likely continue its rise in global economic rankings while struggling with the domestic employment challenge that determines whether aggregate growth translates to broadly shared prosperity.