India is a country of 1.4 billion people of diverse cultural, social, economic, geographic and demographic backgrounds. It provides a huge market for both local businesses and global economies. And India’s recent rise on the global stage has captured attention, at home and abroad.
The GDP of India was projected to be $4.2 trillion by 2025, making it the world’s 4th largest economy behind the US, China and Germany (MoSPI, 2025; IMF WEO, 2024). This is the nominal GDP (Gross Domestic Product) - it measures the total value of all goods and services produced in the country. It is one of the key factors that economists look at to compare the nation's economic strength.
But GDP is more than just numbers. It shows how a nation has performed in terms of how many jobs were created, which sectors are growing, how income is distributed and where the country stands in terms of global power. For India, this achievement was not an overnight phenomenon. It’s a result of decades of reforms, a shift from agriculture dependency to service industries and the dream of a whole nation.
In this blog we aim to unpack the sector wise GDP of India, highlight key factors behind the GDP rank of India, global comparison and the road ahead to $5 trillion and more.
Since independence in 1957, India’s economy has undergone a huge transformation aimed at rapidly adapting it into a modern nation that is self-reliant and reduces dependence on foreign powers. The country adopted a state-controlled, planned economy with emphasis on fundamental sectors such as mining, construction, infrastructure, agriculture, transportation, etc. The focus was on public sector enterprises.
While this helped in building a strong base to start a nation, it also led to inefficiency, slowdown of growth, unbalanced markets and bureaucratic red-tapes, also known as License Raj. This was in stark contrast to the other economies in the West which were thriving with capitalistic ideals that promoted venture and entrepreneurial spirit.
In the 1950s-1970s, heavy reliance was given on agriculture, which contributed to 50% of the GDP of India (Planning Commission, GOI). This stagnation was deemed necessary until the basic needs of an emerging nation were met. However, this resulted in the GDP rank of India stagnating at lower levels.
The real change came in 1991 when a balance of payments crisis forced India to adapt and open up its economy. This was the era of LPG - Liberalisation, Privatisation and Globalisation. Regulations were relaxed, foreign investments rushed in, and the economy was opened to market-driven growth. Global trade, IT and service industry boom started. And after the turn of the millennium, India had moved on from an agrarian economy to a service-based one.
The classification structure of the GDP of India reflects the decades of modernization and diversification across sectors. The sector wise GDP contribution in India is classified into three major sectors - Primary, Secondary and Tertiary as per the Gross Value Added (GVA) estimates by Ministry of Statistics and Programme Implementation data (MoSPI, 2025, PIB, 2025).
This sector consists of agriculture, livestock, forestry, fishing and mining. It employs 40% of the workforce but contributes to around 20% of the Indian GDP in 2025.
This sector includes manufacturing, electricity, gas, water supply, other utility services and construction. For a long time, this sector had been the driving force behind employment, progress and development. Around 25% of the Indian GDP sector wise is estimated to be from this sector.
This comprises the services industries and includes sectors such as defence, public administration services, finance, real estate, professional services, trade, hotels, transport, communications, broadcasting, etc. With the highest contribution to the sector wise GDP of India of around 53% of the gross domestic product in India, they saw a 7.2% overall growth.
The GDP rank of India has been on a steady rise since the 90s. Becoming the 4th largest economy was no accident. It was a strategic choice supported by reforms, demographic participation and rapid digital disruption.
In 2007, the GDP of India had crossed the $1 trillion mark. By 2014 it had doubled to $2 trillion. Now in a decade, it is estimated that the GDP of India in 2025 is $4.2 trillion (IMF WEO, 2024). This remarkable trend of growth is powered by multiple policy changes. Some key factors are as follows:
It all started with the liberalisation in 1991 that changed the closed, state-run, soviet style economy to the open, capitalistic, private-sector run economy that was proven to work well in the West. Successive policies helped keep up the momentum gained:
A lot of emphasis and effort was given to developing a booming infrastructure development and construction industry to aid in the rapid expansion. This was done both to aid in major project development such as highways, dams and bridges and also to give a strong base for private sector construction to develop industry ecosystems.
65% of the Indian population are under 35 years old. This not only provides a young workforce but also gives a potent consumer market, thereby driving the Indian GDP growth rate.
Much of India’s economic progress in the recent past can be attributed to the success of digital technology. In light of the pandemic, the already present digital infrastructure was made robust and people took to it.
India’s IT and Business Process Management sector is worth over $250 billion and has long been recognised as a major export for the nation. The services sector contributes a major part to the sector wise GDP of India.
In 2025, India officially surpassed Japan to become the world’s 4th largest economy according to IMF projections. With $4.187 trillion, the GDP of India is now only behind the US, China and Germany. However Indian GDP growth rate is projected to be 6.2% in 2025 and 6.3% in 2026. This stable growth makes the Indian economy a strong contender for the top 3 spot.
Already on the basis of PPP (purchasing power parity), India ranks 3rd globally. Only behind China and the US. Here’s a brief look at how the Indian economy ranking compares globally.
Sector wise GDP of India is heavily tilted towards services. It is a developing economy and thus growth is higher than other developed economies that have started to stagnate. Shifting from providing a market for the world to sell their products, the outlook is now more about outsourcing the services to India. The Make in India initiative is a good example of a national effort towards making the country a destination for foreign businesses. As India's share in global GDP increases, its influence on trade, investment and geopolitics is becoming more visible. It’s now becoming a key player in the global economic order.
Yet unlike the West, India has a large informal economy and a rural heavy workforce. This has led to a dual nature in the economic makeup of India, which has its own set of challenges and opportunities.
While the milestone of the 4th largest economy is a major achievement, there are still various challenges that the Indian economy might face. Some of the major hurdles in this aspect are:
Despite being a large amount the GDP of India is an aggregate amount. Per capita income remains under $2800, well below other comparable nations such as China or Brazil. Income inequality and wealth concentration amongst a small part of the population are the major issues in India. The majority of the Indian population is still considered to be in the lower socio-economic class.
Despite a fast growth rate, unemployment is still very high in the economy. This is mainly due to informal employment still dominating rural and semi-urban sectors. ‘Jobless growth’ has been used to define sectors like manufacturing.
Over 40% of the workforce is employed in agriculture or related activities, while the contribution to the GDP is much lower (~18%). Compared to other modern economies this ratio is very high. A major reason is low levels of modernisation and productivity.
There is still a major bureaucratic red tape for new businesses, especially in the land, labour and business regulations. On top of that, laws vary from state to state, making it difficult to conduct business freely.
India is among the top 5 solar energy producers in the world. Other renewable sectors, such as EVs and hydrogen-based technology, have gained popularity among policymakers and the general population.
In the realm of digital infrastructure, there has been a lot of growth, especially in the public space, with AADHAAR, Digilocker and UPI models setting an example for the rest of the world to follow. The nationwide easy adoption of such services marks a trend where the Indian population is proven to lead the digital age.
With the threat of China ever looming, India has looked to move away from China as a manufacturing import hub and is trying to set up its own system. This will help meet local needs and provide an alternative to the global market.
India possesses the largest skilled young workforce in the world. Tech skills, services and English language proficiency make it an attractive workforce for the larger global market. This can prove useful in the long run as services can be a major export of India.
India’s GDP growth rate is expected to be 6.5-6.8% in FY 2025-26 according to the Reserve Bank of India (RBI) and IMF forecasts (RBI Monetary Policy, June 2025; IMF WEO, 2024). If this trend is followed India could overtake Germany in 2026-27, ranking as the third-largest economy globally.
The government’s target of becoming a $5 trillion economy may now be within reach by 2027. To this effect, several factors may come into play:
However, future growth will require more than momentum. Structural reforms, especially in land, labour and education, are critical to sustain productivity gains and reduce income inequality.
India is climbing upward, but the shape and speed will depend on how effectively it can turn demographic, technological and geopolitical advantages into sustained growth.
India’s GDP in 2025 has grown to make it the 4th largest economy in the world. It’s not a simple number but a result of decades of effort by the Indian populace and the government alike to usher the country to the top of the world stage, as it was in the pre-colonial era. A look at the sector wise GDP of India shows that the Indian economy is built not only on services and exports, but also on digital connection, an able workforce and a stable, reliable economy.
From agriculture to AI, India’s story is still unfolding. While challenges are there a strong foundation has been laid and one can hope to see a future where India is looked at as a global economic leader not only in numbers but in action. As the world watches, India becomes ready to lead.