Every big economy has a personality. America’s is the consumer, China’s is the factory. India’s is momentum. At $3.96 trillion it’s the world’s sixth-largest economy, and in 2025 it grew 7.6% — faster than any other major economy, the same position it has held for years. China managed 5%. The US managed 2.2%. India is simply running at a different speed.
An economy powered by services, not smokestacks
China industrialized by building factories and exporting goods. India took a stranger route: it skipped a big chunk of the factory stage and went straight to services. Services are roughly half of GDP on World Bank measures, and they punch even harder in exports.
The star is technology. India’s tech industry took in about $283 billion in revenue in the year to March 2025, according to NASSCOM, the industry body — $224 billion of it from exports, employing about 5.8 million people directly. It started with call centres and back-office work in Bangalore and Hyderabad. It now runs global capability centres where multinationals park serious engineering, finance and AI work, plus IT giants like TCS and Infosys that serve most of the Fortune 500. When a big Western company has a software problem, there’s a fair chance the person fixing it is in India.
Around that core sits a vast domestic economy: 1.46 billion consumers, a construction boom, government infrastructure spending on roads, rail and airports, and a homegrown digital payments system, UPI, that Indians now use for everything from metro fares to street-corner tea.
The demographic tailwind
In 2023, India passed China to become the world’s most populous country, according to UN estimates. The difference is age. India’s median age is around 29; China’s is nearing 40, and China’s population has started to shrink. India adds millions of young workers and first-time consumers every year, and over 65% of its people are of working age. Economists call this the demographic dividend, and it’s the fuel under those 7%-plus growth rates.
The catch: big country, modest incomes
Now the cold water. Divide $3.96 trillion by 1.46 billion people and GDP per person is about $2,700 — roughly a thirtieth of the American level, and a fifth of China’s. Agriculture produces about 16% of output but still employs far more people than that, which is a polite way of saying hundreds of millions of workers are stuck in low-productivity jobs. Creating enough good jobs for the young millions arriving every year is India’s central economic challenge.
That’s what makes India the most interesting economy to watch this decade. It passed the United Kingdom, its former colonial ruler, in 2022. The IMF estimates it will overtake Japan around 2026, with Germany’s third place in sight after that. The ranking climbs are arithmetic if the growth holds. Whether living standards climb with them — that’s the real test.