India’s GDP Growth in 2025-26 Projected Highest Among G20 Nations: Global Report
India’s Unmatched Growth Trajectory Amid G20 Economies
India is poised to maintain its position as the fastest-growing economy among the G20 nations for the next two consecutive years, according to the latest Economic Outlook Report released by the Organisation for Economic Cooperation and Development (OECD). The OECD estimates that India’s real GDP will grow at 6.3% in 2025 and accelerate slightly to 6.4% in 2026. These growth projections place India at the top of the global economic performance chart, significantly ahead of the global average and its G20 peers.
The Economic Outlook was officially unveiled during a press conference at the OECD’s Paris headquarters on June 4, 2025, coinciding with informal meetings of the World Trade Organization (WTO) involving several key economic powers, including India. The timing of the report underscores India’s strategic importance in shaping the future trajectory of global trade and growth.
“India is looking to become a $32 trillion economy by 2047. This exponential growth will be possible because of our talent, and I’m here to reiterate people-to-people contact,” said Union Minister for Commerce and Industry, Piyush Goyal, while addressing the India-France Business Conference. The minister was in Paris as part of India’s high-level delegation to the OECD Ministerial Council Meeting.
The OECD’s robust forecast for India comes at a time when many other leading economies are facing significant headwinds. According to the report, global GDP growth is projected to decelerate from 3.3% in 2024 to 2.9% in both 2025 and 2026. These modest projections for the world economy are attributed to a variety of compounding factors, including geopolitical tensions, supply chain disruptions, rising inflationary pressures, and slowing demand in both developed and emerging markets.
Despite this global slowdown, India’s economy is expected to sustain its upward momentum, fueled by structural reforms, digital infrastructure expansion, strong domestic demand, and a relatively stable macroeconomic environment. This optimism is not only echoed in the OECD report but is also being reinforced by a series of investor-focused engagements between Indian and European counterparts.
Piyush Goyal highlighted India’s business-friendly environment and emphasized the government’s razor-sharp focus on easing regulations and attracting foreign direct investment (FDI). “Our razor focus is to make it easier to do business in India,” Goyal stated during his remarks in Paris. He noted that India presents vast opportunities for global investors, with special emphasis on sectors like renewable energy, advanced manufacturing, digital technology, and services.
The Global Context: India as an Outlier Amid Economic Headwinds
The OECD’s report did not paint a rosy picture for the rest of the world. Countries across Europe and parts of Asia are experiencing reduced consumer spending, uncertain energy supply chains, and the residual impacts of earlier monetary tightening. Even the United States is facing moderate to subdued growth forecasts, challenged by elevated interest rates and lingering inflation.
Presenting the Economic Outlook, OECD Secretary-General Mathias Cormann warned of the risks associated with protectionist policies and trade wars. “Additional increases in trade barriers or prolonged uncertainty will further lower growth prospects and likely push inflation higher in countries imposing tariffs,” he said, referring to escalating trade tensions, including potential tariff threats from the U.S. under the Trump administration.
Cormann also addressed the importance of safeguarding multilateralism and trade liberalization, principles that are particularly crucial for emerging markets like India, which are seeking to integrate deeper into global value chains. The OECD emphasized that India’s resilience stems in part from its openness to global trade, its competitive services sector, and a young, growing workforce.
India’s relative insulation from some of the external shocks affecting other economies, such as dependency on oil and gas imports or fragile banking systems, further supports its status as a bright spot in a turbulent global economy. Nevertheless, the report also cautioned that India must remain vigilant against risks including food and energy price shocks, climate vulnerability, and the global monetary tightening cycle.
India-EU Economic Relations: Strategic Ties and the Path to a Free Trade Agreement
One of the major strategic developments on the sidelines of the OECD and WTO meetings in Paris was the renewed momentum in India-European Union (EU) trade relations. The 27-member EU bloc views a comprehensive Free Trade Agreement (FTA) with India as pivotal to deepening economic cooperation and addressing mutual concerns on sustainability, intellectual property, digital trade, and investment facilitation.
According to French Minister of Foreign Trade, Laurent Saint-Martin, negotiations have accelerated substantially, with both sides aiming to finalize the deal “in the coming weeks and months.” Saint-Martin remarked, “India is one of our priorities and I know the European Commission really wants to accelerate the FTA.”
For India, the FTA with the EU is a cornerstone of its broader strategic goal to increase exports, diversify markets, and strengthen bilateral investment flows. Indian trade officials have signaled that the comprehensive nature of the agreement could unlock substantial gains in employment, market access, and technology transfer, particularly for sectors like pharmaceuticals, IT services, textiles, and agriculture.
The renewed focus on bilateral agreements complements India’s push to become a manufacturing hub under the Make in India and Production Linked Incentive (PLI) schemes. These programs are designed to not only boost domestic manufacturing but also integrate Indian firms into global supply chains at a time when many multinationals are seeking to de-risk from overdependence on China.
India’s continued dominance in economic growth forecasts underscores its emergence as a reliable engine of global expansion. While challenges remain, including structural inefficiencies, infrastructure gaps, and environmental sustainability, the outlook for 2025-2026 remains solidly positive. In a slowing world economy, India’s ability to maintain growth above 6% is both a testament to its internal reforms and a reflection of its expanding global partnerships.
Global Economic Context and India’s Projected Growth
India’s economic momentum continues to defy global headwinds. According to the latest 2025 Economic Outlook Report released by the Organisation for Economic Cooperation and Development (OECD), India is projected to record the highest real GDP growth among G20 nations for both 2025 and 2026. The estimates stand at 6.3% and 6.4% respectively. These figures not only reinforce India’s resilience but also highlight its growing role as a global economic engine at a time when most major economies are facing stagnation or slowdown.
The OECD report was unveiled during a high-profile press conference in Paris, where international leaders and economic policy makers had gathered for an informal WTO Ministerial-level meeting. The timing of the report is particularly important as it coincides with mounting geopolitical tensions, rising inflationary pressures, and a slowdown in international trade.
The global economy is predicted to decelerate, falling from 3.3% in 2024 to 2.9% in 2025 and 2026. According to OECD Secretary General Mathias Cormann, “Additional increases in trade barriers or prolonged uncertainty will further lower growth prospects and likely push inflation higher in countries imposing tariffs.” With this cautious outlook, India’s projected trajectory stands out as a beacon of economic optimism.
India’s Diplomatic and Economic Presence in Paris
Union Commerce and Industry Minister Piyush Goyal, representing India at the OECD Ministerial meet, emphasized India’s robust fundamentals and growth ambitions. While addressing the India-France Business Conference, Goyal reaffirmed that India is on track to become a $32 trillion economy by 2047. He credited India’s talented population and regulatory reforms for this exponential growth.
“Our razor-sharp focus is to make it easier to do business in India,” said Goyal, highlighting ongoing initiatives to improve the investment climate. He stressed that India is open for business and offers immense opportunities for global investors across sectors such as infrastructure, digital technology, green energy, and manufacturing.
Despite international concerns over tariff policies under the potential return of the Trump administration in the U.S. and escalating conflicts in Eastern Europe and the Middle East, India’s long-term strategy remains unshaken. The OECD report lauds India’s sound macroeconomic framework, buoyant domestic demand, and significant capital investments as key enablers of sustained growth.
India-EU Trade Relations and the Push for FTA
One of the central themes in the Paris meetings has been the deepening of India-European Union (EU) trade relations. The EU, comprising 27 nations, has expressed keen interest in finalizing a comprehensive Free Trade Agreement (FTA) with India. Both sides have moved past the idea of an interim deal and are now targeting a wide-ranging agreement covering trade, investment, digital cooperation, and sustainable development.
Laurent Saint-Martin, France’s Minister of Foreign Trade, underscored this commitment by stating, “India is one of our top priorities and I know the European Commission really wants to accelerate the FTA process. A deal could come through in the coming weeks or months.”
This potential agreement is expected to boost bilateral trade, increase market access for goods and services, and stimulate investments on both sides. For India, it marks an important step in its diversification strategy to reduce reliance on any single trading partner and enhance its global competitiveness.
Domestic Drivers of India’s Economic Expansion
To understand the source of India’s projected GDP growth, one must look closely at its domestic policies. The government has embarked on a multifaceted reform agenda that spans infrastructure, energy transition, digital innovation, and inclusive finance. Let us now examine the key pillars propelling India’s economic expansion:
1. Infrastructure and Capex-Led Growth: The Indian government has increased capital expenditure to historic highs. In the Union Budget 2024-25, capital outlay was increased by over 30%, primarily targeted at highways, railways, urban infrastructure, and logistics. This massive public investment has triggered a multiplier effect, crowding in private investments and generating employment opportunities across sectors.
2. Production-Linked Incentive (PLI) Schemes: To strengthen domestic manufacturing and reduce import dependency, India has introduced Production-Linked Incentive schemes across 14 sectors, including electronics, automobiles, pharma, textiles, and solar modules. These schemes are designed to boost domestic production and attract global companies looking to diversify their supply chains amid shifting geopolitical dynamics.
3. Start-Up Ecosystem and Digital Economy: India’s start-up ecosystem, now the third largest in the world, is playing a crucial role in driving innovation and productivity. The government’s Digital India initiative, coupled with UPI (Unified Payments Interface) and other fintech innovations, has transformed the way Indians transact, increasing financial inclusion and transparency.
4. Green Transition and Sustainable Growth: Recognizing the importance of sustainable development, India has committed to achieving Net Zero emissions by 2070. The government is actively promoting renewable energy, green hydrogen, and electric vehicles. These sectors are not only climate-friendly but are also generating employment and investment opportunities.
5. Human Capital and Skill Development: India’s demographic dividend is being harnessed through programs aimed at skill development and vocational training. Schemes like PM Kaushal Vikas Yojana and National Apprenticeship Promotion Scheme aim to bridge the skill gap and make the workforce more productive and globally competitive.
6. Tax Reforms and Regulatory Simplification: India’s Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC), and simplification of labor laws have improved the ease of doing business. The reduction in corporate tax rates for new manufacturing firms and the use of technology for compliance have further enhanced investor confidence.
These domestic enablers, combined with geopolitical realignments and the global need for reliable trade partners, put India in a favorable position to sustain its high growth trajectory over the next decade.
Despite the positive projections for India’s GDP growth, the global economic landscape presents several challenges that could influence the trajectory of growth worldwide. The OECD’s report underscores a broader slowdown in global economic expansion, forecasting a dip from 3.3% growth in 2024 to 2.9% in both 2025 and 2026. This slowdown is attributed to multifaceted factors, including geopolitical tensions, evolving trade policies, and lingering aftereffects of the COVID-19 pandemic.
Trade Barriers and Geopolitical Risks
Trade tensions, especially involving major economies such as the United States, remain a significant risk. Although the report references tariff threats originating from earlier U.S. administrations, the ongoing volatility in trade policies continues to inject uncertainty into global markets. The imposition of tariffs or other trade restrictions tends to dampen growth prospects and can exacerbate inflation in affected countries by increasing costs for consumers and businesses alike.
The geopolitical landscape is further complicated by protracted conflicts in Eastern Europe and the Middle East. These conflicts disrupt supply chains, increase commodity prices—especially energy—and create an atmosphere of uncertainty that inhibits investment and international cooperation. The OECD highlights that prolonged geopolitical instability could weigh heavily on the recovery efforts of many economies.
India’s Resilience Amid Global Uncertainty
Against this backdrop, India’s economic resilience stands out. With an anticipated GDP growth rate exceeding 6% in both 2025 and 2026, India is positioned as a global growth leader among the G20 nations. This strength is underpinned by a dynamic domestic market, a young and skilled workforce, and a government committed to economic reforms and infrastructural development.
Union Minister for Commerce and Industry, Piyush Goyal, emphasized India’s ambition to become a $32 trillion economy by 2047. He cited the country’s abundant talent pool and proactive business environment as key drivers that make India an attractive destination for global investors.
Trade Agreements and International Collaboration
India’s growth story is further reinforced by ongoing negotiations to deepen economic ties with major trading blocs, particularly the European Union (EU). The prospective Free Trade Agreement (FTA) between India and the EU is poised to unlock new avenues for trade and investment, providing a framework to reduce tariffs, enhance market access, and encourage mutual cooperation.
French Minister of Foreign Trade, Laurent Saint-Martin, expressed optimism regarding the FTA talks, indicating the possibility of an agreement being reached within the coming weeks or months. This development is seen as pivotal for both parties, with the EU viewing India as a priority partner in its strategic economic plans.
The Road Ahead: Sustaining Growth and Managing Risks
To sustain its growth momentum, India must navigate several internal and external challenges. Domestically, enhancing infrastructure, ensuring regulatory clarity, and fostering innovation remain critical. Furthermore, the government’s commitment to improving ease of doing business is expected to facilitate entrepreneurship and attract foreign direct investment.
On the international front, India’s engagement with multilateral institutions like the OECD and the WTO reflects its commitment to a rules-based global trading system. By aligning with global standards and leveraging diplomatic channels, India aims to mitigate the risks posed by protectionism and geopolitical conflicts.
India’s projected economic growth amid a global slowdown highlights its emerging role as a key engine of global prosperity. While uncertainties persist, strategic policy decisions, robust economic fundamentals, and international partnerships provide a strong foundation for India to continue its upward trajectory. The country’s vision for 2047 as a $32 trillion economy underscores its long-term commitment to inclusive and sustainable development.
As India charts its course towards becoming a $32 trillion economy by 2047, a crucial component of this ambitious vision lies in comprehensive policy reforms and technological innovation. The OECD’s positive economic outlook for India is, in part, a reflection of ongoing efforts to transform India’s economic landscape through structural reforms and digital advancements.
Policy Reforms Driving Growth
India has embarked on a series of significant reforms aimed at simplifying the business environment and improving governance. Initiatives such as the Goods and Services Tax (GST) harmonized the complex tax system across states, facilitating easier compliance and reducing logistical bottlenecks. Furthermore, reforms in sectors such as labor laws, land acquisition, and insolvency resolution are designed to create a more predictable and investor-friendly environment.
These policy changes have encouraged both domestic and foreign investors to increase their participation in the Indian economy. The government’s focus on enhancing infrastructure, including highways, ports, and energy supply, supports industrial growth and improves connectivity across the country.
Digital Economy and Technological Innovation
India’s rapidly growing digital economy is another pillar supporting its economic expansion. With a vast internet user base and a flourishing startup ecosystem, the country is becoming a global hub for technology innovation. Government initiatives such as Digital India and the promotion of fintech, artificial intelligence, and data analytics are fostering a vibrant technology-driven economy.
Technology not only enables new business models but also improves the efficiency of traditional sectors such as agriculture, manufacturing, and services. The increasing adoption of digital payments and e-governance reforms is making public services more accessible and transparent, contributing to overall economic productivity.
Commitment to Sustainable Development
Sustainable growth is integral to India’s economic strategy. Balancing rapid development with environmental responsibility is a priority to ensure long-term prosperity. India has made notable commitments to renewable energy, including ambitious targets for solar and wind power capacity.
The country’s participation in international climate agreements and its focus on clean energy investments signal a transition towards a greener economy. Such efforts are critical not only for environmental reasons but also for creating new industries and job opportunities.
Enhancing Human Capital
India’s demographic dividend—its young population—offers a significant advantage, provided investments in education and skill development keep pace with economic demands. The government’s emphasis on improving educational infrastructure, vocational training, and higher education quality aims to equip the workforce with skills relevant to the evolving global economy.
By fostering innovation and entrepreneurship, India seeks to create a competitive labor market that attracts global enterprises and sustains high growth rates.
Navigating Global Economic Shifts
India’s growth prospects also depend on its ability to adapt to global economic changes. The shifting dynamics of supply chains, increasing digital trade, and evolving geopolitical alliances require strategic diplomacy and economic foresight.
India’s active engagement in multilateral forums like the G20, OECD, and WTO facilitates dialogue on trade liberalization, investment facilitation, and economic cooperation. Strengthening these international partnerships enhances India’s integration into the global economy and buffers it against external shocks.
Conclusion: A Vision for Inclusive and Dynamic Growth
India’s position as the fastest-growing major economy in the G20 reflects its economic resilience and strategic vision. The combined effect of sound policy reforms, innovation-driven growth, sustainable development, and international cooperation forms a robust foundation for the country’s economic future.
Achieving the $32 trillion economy goal by 2047 will require sustained effort across multiple dimensions, including governance, infrastructure, human capital, and global engagement. However, with its clear strategic focus and continued momentum, India is poised to become a leading force in the global economic landscape.
While India’s economic outlook remains robust and optimistic, it is imperative to acknowledge the challenges that lie ahead in realizing the ambitious targets set for 2025, 2026, and beyond. Addressing these challenges through strategic and coordinated responses will be crucial for sustaining high GDP growth and achieving inclusive development.
Managing Inflationary Pressures and Monetary Policy
One of the significant macroeconomic concerns impacting India and many other economies is inflation. Rising commodity prices, supply chain disruptions, and geopolitical tensions have contributed to inflationary pressures worldwide. For India, managing inflation without stifling growth requires careful calibration of monetary and fiscal policies.
The Reserve Bank of India (RBI) plays a critical role in this balancing act by adjusting interest rates and implementing liquidity management measures. Ensuring price stability while supporting credit flow to productive sectors remains a priority for sustaining consumer confidence and investment.
Infrastructure Gaps and Urbanization
Rapid urbanization and industrialization necessitate massive investments in infrastructure, including transport, energy, water, and sanitation systems. Although significant progress has been made in improving road networks, railways, and ports, infrastructure gaps persist, especially in rural and semi-urban areas.
Bridging these gaps is essential to enhance productivity, reduce logistic costs, and improve the quality of life. Public-private partnerships (PPP), increased budget allocations, and innovative financing mechanisms are pivotal strategies to accelerate infrastructure development.
Addressing Employment and Workforce Transition
India’s demographic advantage comes with the challenge of generating sufficient employment opportunities for millions entering the workforce annually. While economic growth has created jobs in sectors like IT, services, and manufacturing, there remains a large informal sector with limited job security and low productivity.
Efforts to formalize the economy, expand skill development programs, and promote entrepreneurship are key to creating decent and sustainable jobs. Furthermore, reskilling and upskilling initiatives aligned with technological advancements are necessary to prepare workers for evolving job markets.
Strengthening Agriculture and Rural Economy
Agriculture continues to be a critical sector, employing a substantial portion of the population. However, it faces challenges such as fragmented landholdings, dependence on monsoon rains, and limited access to modern technology and credit.
Government policies focusing on agricultural reforms, irrigation infrastructure, crop diversification, and market access aim to enhance productivity and farmer incomes. The integration of rural economies with digital platforms and supply chains also offers promising avenues for rural development.
Enhancing Trade Competitiveness and Export Diversification
India’s trade policy and export strategy are vital to sustaining economic momentum. While domestic demand drives much of the growth, expanding exports will help balance trade and improve foreign exchange reserves.
Improving trade competitiveness involves reducing tariffs and non-tariff barriers, upgrading quality standards, and enhancing infrastructure at ports and logistics hubs. Diversifying export products and markets, especially by leveraging free trade agreements (FTAs), will mitigate risks associated with global economic fluctuations.
Ensuring Financial Sector Stability
A stable and efficient financial sector is foundational to economic growth. India has made significant strides in banking reforms, digital payments, and financial inclusion. However, challenges remain in dealing with non-performing assets (NPAs), ensuring robust regulatory frameworks, and promoting capital market development.
Strengthening the financial system through transparency, governance reforms, and enhanced risk management will boost investor confidence and facilitate the flow of capital to productive sectors.
Navigating Global Geopolitical and Economic Uncertainties
India’s economic growth is also influenced by global geopolitical dynamics, including trade tensions, conflicts, and shifting alliances. The OECD report highlights concerns around tariff threats and regional conflicts that could affect global growth trajectories.
India’s diplomatic engagement, strategic partnerships, and active participation in multilateral forums aim to create a stable and predictable external environment conducive to trade and investment. Building resilience through diversification and fostering innovation is essential to mitigate external risks.
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