India set to become third-largest economy by 2030: S&P Global Ratings

India will become the world's third-largest economy by 2030, a report released by S&P Global Ratings said on Tuesday. In 2026-27, India's gross domestic product (GDP) is expected to grow 7 per cent. India is currently the fifth largest economy in the world behind the US, China, Germany and Japan.

In its "Global Credit Outlook 2024", S&P said that India would be the fastest-growing emerging market in the world. Still, its paramount test will be whether the country can become the next big global manufacturing hub.

S&P said India is expected to grow at 6.4 per cent in 2023-24 as compared to 7.2 per cent in the previous financial year. The rating agency said the growth rate will remain at 6.4 per cent in 2024-25 before climbing to 6.9 per cent in the next and 7 per cent in 2026-27.

"We see India reaching 7 per cent in 2026-27 fiscal...India is set to become the third-largest economy by 2030, and we expect it will be the fastest growing major economy in the next three years," S&P said.

"A strong logistics framework will be key in transforming India from a services-dominated economy into a manufacturing-dominant one," it said.

Unlocking the labour market potential will largely depend upon upskilling workers and increasing female participation in the workforce.

"Success in these two areas will enable India to realize its demographic dividend," it said.

S&P also said a booming domestic digital market could fuel expansion in India's high-growth startup ecosystem during the next decade, especially in financial and consumer technology.

In the automotive sector, India is poised for growth, building on infrastructure, investment, and innovation, it added.