The growth story
India has been one of the fastest-growing large economies for over a decade, averaging around 6-7% annual GDP growth. Having overtaken the UK to become the world's fifth largest economy, it is projected to become the third largest (behind the US and China) by the early 2030s. This trajectory has attracted growing international investment and political attention.
The demographic dividend
India has a median age of around 28 — young by global standards, at a time when China and many Western economies are ageing rapidly. This large working-age population is a potential economic driver, but realising the dividend requires generating enough productive employment, which requires sustained investment in education, skills and economic complexity.
The drivers of growth
India's IT services sector — with Bengaluru, Hyderabad and Pune among the global centres — has been the foundation of its modern economy. Manufacturing is growing, supported by the government's Production-Linked Incentive schemes and the global interest in supply chain diversification away from China. Domestic consumption, driven by a growing middle class, is a third driver.
The challenges
India's growth is unevenly distributed: significant poverty, stark rural-urban divides and persistent gender inequality constrain its potential. Infrastructure — particularly power, logistics and urban transport — remains inadequate relative to the scale of economic ambition. Bureaucratic friction in starting and scaling businesses has been reduced but not eliminated. And the transition from agriculture (which employs around 40% of the workforce but contributes only 15% to GDP) is a profound structural challenge.