The key drivers that are enabling the growth in the current cycle are consumption…infrastructure investments and the tech stack…”
Vice President, Murali Yerram, highlights how these drivers are helping innovation and entrepreneurship and why investors should consider India – a gateway to growth.
India overtook Japan in 2025 to become the world’s fourth-largest economy, and the IMF expects it to surpass Germany by 20281. What’s behind this momentum?
India’s growth outpaced China in 2024 and is expected to do so again in 2025 and 2026.2
of GDP comes from private consumption3
of the population will be of working age by 20304
of expenditure growth will come from the middle class by 20405
Reform initiatives – including corporate tax cuts, the production-linked incentive (PLI) scheme and infrastructure investment – are boosting corporate efficiency. India has also set ambitious renewable energy targets.
India’s share of global gross domestic product (GDP) rose to 8.25% in 2024.⁷
By 2040, India’s middle class is expected to grow by nearly 600 million people, driving 75% of expenditure growth⁸. This will create one of the world’s largest and most dynamic consumer markets.
RELATED THEMES AND INSIGHTS
Investors see India's growth potential, but market valuations may not fully reflect it.
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*The total expense ratio of a fund (TER). The on-going charges are the fees the fund charges to investors to cover the costs of running the Fund. Additional costs, including transaction fees, will also be incurred. These costs are paid out by the Fund, which will impact on the overall return of the Fund. Fund charges will be incurred in multiple currencies, meaning that payments may increase or decrease as a result of currency exchange fluctuations.
Footnotes:
1. Source: IMF, October 2024 World Economic Outlook. For India, data and forecasts are presented on a fiscal year basis, with FY 2023/24 (starting in April 2023) shown in the 2023 column. India's growth projections are 7.3% in 2024 and 6.5% in 2025 based on calendar year.
2. Factset, Ministry of Statistics & Programme Implementation, as of December 2022.
3. United Nations.
4. Brookings Development, Aid and Governance Indicators. Raw data, Homi Khras, Brookings Institution, 2012.
5. IMF World Economic Outlook, April 2023. www.imf.org/external/datamapper/datasets/WEO, as of 19.06.2023. Estimates as of 2023. Projections are based on IMF staff estimates. Forecast methodology differs from country to country; as such, some countries projection years may start earlier than others. There is no assurance that any projection, estimate or forecast will be realized.
6. Source: Production Linked Incentive (PLI) Schemes in India. (2021, August 10). Invest India; Modified Programmefor Semiconductors and Display Fab Ecosystem | Ministry of Electronics and Information Technology, Government of India. (n.d.).
7. Brookings Institution - Development, Aid, and Governance Indicators (DAGI), FactSet and Ministry of Statistics and Programme Implementation - India, March 2015. Estimates from 2020.
8. Brookings Institution - Development, Aid, and Governance Indicators (DAGI), FactSet and Ministry of Statistics & Programme Implementation - India, March 2015. From 2020 estimated values.
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