India Poised To Become World’s Third-Largest Economy By 2028: Morgan Stanley
India’s GDP is projected to more than double to $10.6 trillion by 2035, with three to five states nearing the $1 trillion mark individually, according to Morgan Stanley. Over the next ten years, India is expected to contribute 20% of global economic growth.
India is on course to become the third-largest economy globally by 2028 and could expand its GDP to $10.6 trillion by 2035, according to a new Morgan Stanley report released on Wednesday. The study also underscores the crucial role Indian states will play in enabling this economic shift.
By 2035, three to five states — including Maharashtra, Tamil Nadu, Gujarat, Uttar Pradesh, and Karnataka — are likely to reach close to the $1 trillion GDP milestone, placing them individually among the world’s top 20 economies, the report projected.
Citing current data, the report mentioned that the leading three states are Maharashtra, Gujarat, and Telangana. It also noted that Chhattisgarh, Uttar Pradesh, and Madhya Pradesh have shown the most notable rise in economic rankings over the last five years.
India is anticipated to contribute one-fifth of global growth in the coming decade and emerge as a key growth driver for global corporations’ revenues, the report said.
Morgan Stanley economists pointed out that India’s 28 states and eight Union Territories are instrumental in achieving these targets. “States manage their own budgets and attract investments through competitive policies and improved ease of doing business. Every business and factory ultimately operates within a specific state,” the report explained.
The report attributed India’s growth trajectory to the principle of competitive federalism, under which states enjoy substantial administrative and political freedom. This autonomy allows them to formulate industrial strategies and compete for capital, shaping India’s emergence as a manufacturing powerhouse and enabling it to double per capita income within seven years while maintaining momentum in capital markets.
In the past ten years, India has sharply increased spending on infrastructure. The central government’s capital investment has gone up from 1.6% of GDP in FY15 to 3.2% in FY25, leading to substantial enhancements in logistics and transport infrastructure. The highway network has grown by 60%, the number of airports has doubled, and metro rail systems have expanded four times over.
This progress is attributed to landmark national programs such as PM Gati Shakti, the National Infrastructure Pipeline, Bharatmala, Sagarmala, and UDAN, implemented in tandem with various state-level initiatives. States also dominate investment in sectors like electricity, water supply, and urban development.
“The Centre and states must continue to coordinate closely to fulfill India’s growth goals,” the report emphasized.
India has already moved past Japan to claim the spot as the fourth-largest economy in the world, according to IMF data, announced by NITI Aayog CEO BVR Subrahmanyam in May 2025. As per the IMF, India’s GDP now stands at $4.187 trillion, surpassing Japan’s $4.186 trillion.
In parallel, a recent JP Morgan report described India as a safe haven among emerging markets amid global trade uncertainty. It noted that declining inflation, improved liquidity in the banking system, and lower government borrowing requirements are expected to sustain India’s economic momentum.
The report added that India is set to register the highest GDP growth among countries covered in JP Morgan’s global tracking for 2025. Growth is also being powered by targeted stimulus efforts and stronger urban household finances.
A recovery in rural demand, further supported by a favourable monsoon, is also contributing to India’s optimistic outlook.
The report stated, “India: Disinflation, ample liquidity, and reduced borrowing to drive expansion. Demand-side stimulus and healthier urban household balance sheets are providing further support.”
JP Morgan’s strategists expressed a positive view on several emerging economies, such as India, Korea, Brazil, Philippines, UAE, Greece, and Poland. Among these, India carries a 19% weighting in the MSCI EM Index and has been rated ‘Overweight’ (OW) by JP Morgan.
