India’s Economy Surpasses Japan: What This Shift Means for Investors and Business Owners in Oman
New Delhi – India has surpassed Japan to become the world’s fourth-largest economy, according to the Indian government’s latest end-of-year economic review. Officials are optimistic that India will overtake Germany within the next three years.
The official confirmation is awaited in 2026, when final annual GDP figures are released. The International Monetary Fund (IMF) projects that India will move ahead of Japan as early as next year.
The government economic briefing, released late Monday, stated, “India is among the world’s fastest-growing major economies and is well-positioned to sustain this momentum.” The note highlighted that with a GDP valued at $4.18 trillion, India has overtaken Japan and is on track to surpass Germany, whose GDP is expected to reach $7.3 trillion by 2030.
IMF forecasts for 2026 estimate India’s economy at $4.51 trillion, slightly higher than Japan’s $4.46 trillion.
India’s positive outlook persists despite recent economic challenges, including substantial tariffs imposed by the United States in August related to New Delhi’s purchases of Russian oil. The government noted that continued growth demonstrates India’s resilience amid ongoing global trade uncertainties.
However, other economic indicators present a more cautious perspective. India became the most populous country in 2023, overtaking neighboring China. Nevertheless, its GDP per capita remains significantly lower than those of leading economies, standing at $2,694 in 2024—approximately 12 times less than Japan’s $32,487 and 20 times less than Germany’s $56,103, according to the World Bank.
More than a quarter of India’s 1.4 billion population is between 10 and 26 years old, posing challenges in creating sufficient well-paid jobs for millions of young graduates. The government acknowledged, “As one of the world’s youngest nations, India’s growth story depends on its ability to generate quality employment that productively absorbs its expanding workforce and delivers inclusive, sustainable growth.”
This year, Prime Minister Narendra Modi introduced substantial consumption tax cuts and enacted labor law reforms in response to economic growth slowing to a four-year low in the fiscal year ending March 31.
The Indian rupee reached a record low against the US dollar in early December, depreciating about 5% in 2025. This decline is linked to concerns over the absence of a trade agreement with Washington and the impact of US tariffs on Indian exports.
India ascended to the world’s fifth-largest economy in 2022 after surpassing the United Kingdom, according to IMF data.
Special Analysis by Omanet | Navigate Oman’s Market
India’s rise as the world’s fourth-largest economy presents significant opportunities for Omani businesses to deepen trade and investment ties with one of the fastest-growing markets. However, the ongoing geopolitical tensions and trade uncertainties underscore the need for cautious, well-informed strategies to mitigate risks. Smart investors should focus on sectors benefiting from India’s youthful demographic and economic reforms, while entrepreneurs might explore partnerships and ventures aligned with India’s consumption and labor market transformations.
