India’s Journey To A $5 Trillion Economy: 2025 Update on Growth And Reforms
Introduction
In 2019, the government set an ambitious dream of making India a $5 trillion economy by 2024-25. This target seemed like an unprecedented dream of highly optimistic leadership then.
However, cut to 2023, India has already added half a trillion dollars in its making. The Indian economy rose from $2.84 trillion in 2019 to $3.5 trillion in 2023. That is already 5.8% YoY growth for India.
Despite the global pandemic and almost world war, India’s economy has grown steadily in recent years. But, there are still some roadblocks that need to be addressed to achieve this target.
Top 10 Economies In the World
Before we look at India’s journey to a $5 trillion economy, let’s have a look at the top 10 economies in the world today and how they compare:
| Rank and Country | GDP (USD) |
| 1. United States of America | $30.34 trillion |
| 2. China | $19.53 trillion |
| 3. Germany | $4.92 trillion |
| 4. Japan | $4.39 trillion |
| 5. India | $4.27 trillion |
| 6. United Kingdom | $3.73 trillion |
| 7. France | $3.28 trillion |
| 8. Italy | $2.46 trillion |
| 9. Canada | $2.33 trillion |
| 10. Brazil | $2.31 trillion |
The Vision Behind The $5 Trillion Goal
Back in 2019, Prime Minister Narendra Modi laid out a bold dream of turning India into a 5 trillion dollar economy1. At the time, India’s economy was valued at around USD 2.94 trillion, already the fifth largest in the world. But this vision wasn’t just about numbers; it was about transforming India into a global economic powerhouse that creates more jobs, raises incomes, and improves everyday life for its people.
According to the International Monetary Fund (IMF), hitting this target means growing at around 8–9% every year. Besides, Krishnamurthy V. Subramanian, Executive Director, IMF and Former Chief Economic Advisor, Government of India, has suggested that India can be a $55 trillion economy by 2047 with 8% real growth2. The goal aligns with India’s broader objectives under ‘Amrit Kaal,’ aiming for advanced economic status by 2047 through structural reforms and robust macroeconomic policies.
Assessing India's Economic Progress: Key Indicators and Milestones
So, how far have we come?
As of the end of FY2023, India’s GDP stands at roughly USD 3.7 trillion—more than double of USD 1.71 trillion back in 2010–113. Further, India’s GDP has doubled in size over the last ten years, according to the latest data released by the IMF. The data revealed that India’s GDP stood at USD 2.1 trillion in 2015 and is projected to reach USD 4.27 trillion by the end of 2025, marking a 100 per cent increase within a decade.
The services sector is doing the heavy lifting, making up about 53.3% of the economy, followed by industry at 28.3% and agriculture at 18.4%, according to official data from the Ministry of Statistics and Program Implementation for the fiscal year 2022-234.
Despite global uncertainty, India continues to be one of the fastest-growing major economies. Deloitte expects the country to grow between 6.5% and 6.8% in FY20255. Strong rural consumption, robust agriculture, and solid export numbers in manufacturing show that the foundation is strong, even as inflation and currency swings remain concerns alongside the global economic conditions amidst a brewing trade war between major economic powerhouses like the US and China.
Unveiling Opportunities: Sectors Poised For Growth
India’s road to USD 5 trillion isn’t just about growth for growth’s sake; it’s about unlocking big opportunities across various sectors.
Let’s start with services.
This sector already contributes over 55% to GDP, with IT, healthcare, and finance leading the charge6. In fact, India’s tech exports touched a whopping USD 194 billion in FY2023, according to NASSCOM7.
Manufacturing is getting a serious boost, too. The government wants to increase its share in the economy from 16% to 25% by 2025 through the Production Linked Incentive (PLI) schemes, which have been rolled out across 14 key sectors8. So far, the PLI has attracted investment promises of around INR 1.61 lakh crore9.
Agriculture, often seen as traditional, is getting a modern makeover with digitisation, better market access, and a strong push toward exports. Agri-export numbers crossed USD 50 billion in FY2022, mainly through staples like rice, spices, and fruits10. Additionally, the use of advanced technologies like satellite imagery, weather forecasting, artificial intelligence, etc., has been transforming Indian agriculture.
And then there’s infrastructure. Massive projects like Bharatmala for highways and Sagarmala for ports are building the backbone of India’s logistics system. Meanwhile, renewable energy is becoming a big deal. India has set a goal of 500 GW of non-fossil fuel capacity by 2030, as per the Ministry of New and Renewable Energy.
Consumer-facing sectors are also heating up. With a young, aspirational population and a booming middle class, these sectors are set to ride the consumption wave.
Government Policies And Reforms
What’s fueling all this momentum? A lot of it comes down to policy changes and structural reforms.
The Goods and Services Tax or GST, as we popularly know it, launched in 2017, simplified the tax system and boosted collections. Monthly revenues have regularly crossed INR 1.5 lakh crore (about USD 18 billion) in 2023.
The Insolvency and Bankruptcy Code or IBC helped clean up the banking system by improving how bad loans are handled. Add to that the corporate tax cuts allowing new manufacturing units to pay just 15% now, and you’ve got a business-friendly setup that’s attracting global companies.
The PLI scheme has been a game-changer, especially for sectors like electronics, pharma, and auto components. And by opening up foreign direct investment across areas like defence and telecom, India has seen a big jump in global investor interest.
Digital India is also making a real impact. Thanks to platforms like Aadhaar, UPI, and DigiLocker or the India Stack digital infrastructure, financial inclusion is at an all-time high. UPI alone processed over INR 24.77 lakh crore worth of transactions in March 2025, proving how quickly Indians have embraced digital payments11.
What It Means For Citizens And Investors
If the economy grows, people get more job options, better wages, and improved infrastructure. It means better schools, hospitals, roads, and services, especially in rural and semi-urban areas. More spending by the government on public welfare can directly uplift lives.
For investors, whether individuals or institutional investors, from both India and abroad, the country is looking like a sweet spot. High-growth areas like tech, renewables, and consumer goods offer exciting returns. With better ease of doing business and a massive domestic market, the country has become a magnet for foreign investment.
According to DPIIT, India received USD 71 billion in FDI in FY2022–23, and sectors like retail and automotive are expected to show double-digit growth in FY2025.
Roadblocks Ahead Of India’s $5 Trillion Dream
Recently, the International Monetary Fund (IMF) has decreased its GDP projection for India from 7.4% to 6.8%12. Also, OECD and the World Bank have decreased their optimistic projection due to the spillover effect of the slowdown in the global economy.
1. Effects Of Global Pandemic: The pandemic was a major roadblock to global growth. During FY20-21, India’s GDP growth was -6.6% causing a major hindrance to the country’s dream. Even after the world has emerged from the global pandemic, it still faces its ripple effects.
The global supply chain bottlenecks have not been completely erased. The increase in foreign remittance during the pandemic has caused a ripple rise in inflation. This led to an inflation rate of 6.6%13 in 2020, compared to 3.73% in 201914.
2. Slow Growth In Agriculture: The agricultural sector is a crucial part of India’s economy. Around 50% of India’s population relies on agricultural practices as a source of livelihood15.
In contrast, the agricultural sector contributed only 20.2% of the country’s GDP in 2022. In fact, after 17 years, the GDP contribution for agriculture has touched 20%16. Even after several years of the green revolution, India’s growth in the agricultural sector is still inconsistent.
3. Foreign Geo-Political Issues: In the past three years, the geo-political scenario of the world has been very dynamic. It has faced various problems, such as:
- An aggressive increase in interest rates by Federal Reserve
- Energy Crisis in Europe
- Russia-Ukraine war
- China’s zero covid Policy
- UK’s economic recession
These factors have caused intangible ripple effects in global trade, leading to a slowdown in India’s growth story.
4. Unharnessed Manufacturing Potential: 70%17 of India’s total export still comprises 30% of the world's traded commodities with a declining global share, meaning most of India’s exports are raw materials and low-value products. Despite the potential of a complex manufacturing industry, India is unable to produce high-value products that can generate better global demand.
5. Education And Skill Gap: India has a significant education and skills gap, with just 5% of its workforce recognized as formally skilled18. Despite the government's continuous measures to improve the education system, only 29% of the Indian population have completed their secondary education19.
These roadblocks might not directly impact India's current economic goals. However, overcoming these roadblocks can easily help India achieve the $5 trillion dream.
Factors Contributing To India’s Growth
1. Diversifying exports: India has already aligned its “Make in India” and “Local goes Global” projects with the dream of achieving $5 trillion. The government has launched the PLI scheme of INR 1.97 lakh crores to boost the manufacturing units of the country. Assuming that 80% of our industry is categorised as MSMEs, the PLI scheme can create several jobs and increase the purchasing power of consumers20.
2. New Technology Adoption: India has become the powerhouse of adopting new technology. From finance to manufacturing, almost every sector is adopting technology for better efficiency and improved productivity. Also, the UPI launch has boosted India's digital era. In 2021-22, there were 47.6 billion transactions made through digital channels, of which 50% were made through UPI21.
3. Going Green: Around 40% of the country's energy is produced using renewable energy sources22. This switch to renewable energy can reduce the country’s imports significantly. Going further, India is estimated to produce 50% of its energy through renewable sources by 2030, reducing its imports by almost $300 billion23.
4. Offshoring Opportunity: Covid-19 caused a secular shift in the work culture of remote teams. This favours India, as businesses from around the world found it more cost-effective to work with people living in India. Professionals from various industries have the opportunity to earn in higher-value currency, giving them an advantage of better value for their work.
5. Attracting Foreign Investments: India has been attracting foreign investments in various sectors. India's manufacturing sector has been developing into an investment hub for foreign players, with foreign direct investment (FDI) of US$104.18 billion between April 2000 and December 2021. India received $58.8 billion in foreign direct investment (FDI) in the financial year 2022 (FY22). Initiatives like 'Make in India' and Atmanirbhar Bharat have been pushing local production as well as local assembly, which has been steadily increasing India's manufacturing base.
As India attracts more global investments and strengthens its financial markets, fixed-income opportunities offer a stable way to participate in this growth.
6. Youth Population: With around 700 million people below the age of 25, India has the largest youth population in the world17. This not only makes India the next talent factory in the world. But also give us the added advantage of having the largest customer base. India’s youth is highly skilled and motivated to drive change in various sectors.
The Way Forward
Of course, the journey isn’t without bumps. Currency depreciation, inflation, and trade deficits are real challenges. Infrastructure gaps and over-reliance on imports, especially in areas like electronics, need fixing. The good news is that the government is aware of and working on it, pushing for more domestic manufacturing, digital skilling, and economic diversification.
Besides, in recent times, India has been collaborating with its trading partners through trade negotiations to boost the country’s exports amidst a trade-tariff turmoil that is hitting markets worldwide.
Going forward, India needs to stay agile, especially in a world where global trade dynamics can shift overnight. Investing in innovation, going green, and creating more inclusive job opportunities will be key. But with strong domestic demand, smart policy moves, and a clear long-term vision in place, India looks well on track to hit that USD 5 trillion mark and beyond as it marches toward 2047.
Conclusion
As McKinsey CEO Bob Sternfels said, “It is not India’s decade, it's the century of India.”
India's goal of becoming a USD 5 trillion economy is certainly achievable, although it may face challenges along the way. Due to roadblocks faced along the way, India may skip the target by a year or two.
But with the right policies and initiatives, India can overcome these challenges and reach new heights in the global economy. The future looks promising for India's economy, and it will be exciting to see how it evolves in the years to come.
You can also be a participant in India’s growth journey actively. Invest in the country’s fastest-growing startups. To explore lucrative investment opportunities, sign up with Grip today!
Frequently Asked Questions On $5 Trillion Economy
1. Will India become a 5 trillion dollar economy?
The Ministry of Finance’s note titled “Roadmap for $5 trillion economy in light of global economic and geopolitical circumstances” notes that India was a USD 3.57 trillion economy in FY24 and that at an annual growth rate of around 6.5-7%, the target of USD 5 trillion would be achieved by 2028-29. Therefore, it is likely that India will soon achieve its USD 5 trillion economy target.
2. Why is the USD 5 trillion economy target important for India?
Besides a sign of economic prowess, the USD 5 trillion milestone represents the prospects of more jobs, higher incomes, better infrastructure, and a stronger say in global affairs. For everyday Indians, it translates to improved living standards, more opportunities, and a brighter future.
3. Which sectors will drive India’s growth to a $5 trillion economy?
The services sector, especially IT and finance, is leading the charge. Manufacturing is booming with PLI schemes, while agriculture is getting smarter with tech and exports. Besides, a push for green energy and mega infrastructure projects, these are the sectors pulling India toward USD 5 trillion.
4. How close is India to becoming a $5 trillion economy?
India’s economy has already grown from USD 2.84 trillion in 2019 to around USD 4.27 trillion in 2025. That’s a massive leap despite global headwinds like the pandemic and war. While we might miss the original 2024-25 target, the finish line isn’t far off, with the Ministry of Finance projecting a timeline of 2028-2029.
5. How will a $5 trillion economy benefit the average Indian?
It will bring better-paying jobs, improved healthcare and education, faster trains, cleaner cities, and more digital access. For rural areas, it means roads, water, electricity, and opportunities. In short, the growth trickles down to touch every Indian’s life, directly or indirectly.
6. Can India achieve the $5 trillion target on time?
India might miss the originally expected timeline of 2024-2025 to achieve the target of USD 5 trillion economy, but we might get to that milestone very well by 2028-2029 or at least by the end of this decade.
References:
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