India’s economy is showing remarkable resilience and momentum, with the GDP expanding by 7.4% year-on-year in the first quarter of 2025 — the sharpest growth rate of the fiscal year and well above market expectations of 6.7%.

Key Growth Drivers

- Private Consumption: Rose by 6%, reflecting strong domestic demand and improving consumer sentiment.

- Gross Fixed Capital Formation: Jumped 9.4%, signaling robust investment activity — the highest in nearly two years.

- Net Exports: Boosted GDP as exports grew 3.9% while imports fell 12.7%, improving the trade balance.

India’s low dependence on exports and easing inflationary pressures have helped shield the economy from global volatility. Lower food and energy prices have also contributed to a more favorable investment climate.

Global Standing and Future Outlook

India recently overtook Japan to become the fourth-largest economy in the world, with a nominal GDP of US$ 3.78 trillion. Projections suggest India could reach US$ 5 trillion by 2027, surpassing Germany by 2028.

The full fiscal year growth for 2025 is estimated at 6.5%, driven by:

- Rising employment

- Expanding private consumption

- Record FDI inflows of US$ 49.3 billion, a 15% increase over FY24

Trade and External Position

Exports are expected to hit US$ 436.6 billion in FY25, led by engineering goods, petroleum products, and electronics. The current account deficit narrowed to 0.6% of GDP, thanks to stronger service exports and remittances.

Conclusion

India’s economic trajectory remains robust, fueled by domestic demand, strategic reforms, and investor confidence. As global uncertainties persist, India’s diversified growth model and expanding middle class position it as a key player in the global economy.