India is on track to become the world's third-largest economy by 2030, reported S&P Global Ratings on Tuesday, anticipating a 7% GDP growth in the fiscal year 2026-27. Currently occupying the fifth position, India lags behind the US, China, Germany, and Japan.

In their Global Credit Outlook 2024, S&P estimated a 6.4% GDP growth rate for India in the financial year ending March 2024, a decline from the 7.2% recorded in the preceding fiscal year. The growth rate is expected to persist at 6.4% in the next fiscal year (2024-25) before rising to 6.9% and 7% in the subsequent years, respectively.

S&P emphasized India's potential to become the fastest-growing major economy in the next three years, highlighting the crucial challenge of transforming from a services-oriented economy to one dominated by manufacturing. They underscored the importance of building a robust logistics framework for India to emerge as a global manufacturing hub.

The realization of India's labor market potential, according to S&P, hinges on upskilling workers and increasing women's participation in the workforce. Success in these areas, they noted, is essential for India to harness its demographic dividend.

S&P acknowledged the significant growth of India's domestic digital market, foreseeing it as a driving force for the expansion of the startup ecosystem, particularly in financial and consumer technology, over the next decade.

Furthermore, S&P expressed optimism about India's automotive sector, stating that the country is well-positioned for development, leveraging infrastructure, investment, and innovation. In a report from late October, S&P predicted that India's economy would more than double to $7.3 trillion by 2030, up from $3.5 trillion in 2022.