India set to become the third-largest economy by 2030: S&P Global Ratings

India will become the world's third-largest economy by 2030 and the fastest growing major economy in the next three years, according to a report released by credit rating agency S&P Global Ratings on Tuesday (December 4).

The credit rating agency predicts that India's GDP growth will reach 7% in the financial year 2026-27, from 6.4% projected expansion in FY24.

The Indian economy grew 7.2% in 2022-23 fiscal ended March 2023. The country's GDP expanded 7.8% and 7.6% in the June and September quarters, respectively.

According to S&P Global Ratings, a major test for India would be to unlock the 'immense opportunity' and become the next big global manufacturing hub.

"Developing a strong logistics framework will be key in transforming India from a services-dominated economy into a manufacturing-dominant one," the credit rating agency said in its report titled 'Global Credit Outlook 2024: New Risks, New Playbook'.

The ratings agency also said that unlocking the labor market potential will largely depend upon upskilling workers and increasing female participation in the workforce. "Success in these two areas will enable India to realize its demographic dividend," it said.

S&P Global Ratings further noted that a booming domestic digital market could also fuel expansion in India’s high-growth startup ecosystem during the next decade, especially in financial and consumer technology.

In the automotive sector, India is poised for growth, building on infrastructure, investment, and innovation, it said.

India's GDP growth rate stood at 7.6% for the July-September. At 7.6%, the latest quarterly growth number is significantly higher than expectations.

Meanwhile, the Reserve Bank of India had forecast a growth rate of 6.5%.