India on Track to Become World’s Third-Largest Economy by 2028 UBS

• According to the latest UBS Global Research report , India is projected to become the world’s third-largest economy by 2028 , overtaking Japan and Germany , with annual GDP growth averaging around 6.5% . The report, authored by Tanvee Gupta Jain , Chief India Economist at UBS, highlights India’s strong domestic demand, reform momentum, and macroeconomic stability as key growth enablers.

Growth Drivers and Economic Outlook

• UBS projects India’s real GDP growth at 6.4% in FY27 and 6.5% in FY28 , underpinned by robust consumption, ongoing infrastructure investments, and policy reforms. The country’s consumer market is also set to become the third-largest globally by 2026 , supported by a young workforce and rising urban incomes.

Key growth catalysts include:

• Continued infrastructure expansion through government-led capital expenditure.

• Simplification and deregulation of industrial and manufacturing policies.

• Rapid digitalisation and AI adoption across sectors.

• Sustained growth in technology, R&D, and renewable energy industries.

UBS estimates that India’s current account deficit will remain moderate at 1.2% of GDP in FY27 , while CPI inflation will average 4.3% , staying below the Reserve Bank of India’s (RBI) 4.5% target.

Risks and Reform Priorities

• While the outlook remains positive, UBS warns that high trade tariffs (~50%) could shave off 50 basis points from growth. Additionally, potential U.S. tax measures on offshore payments may reduce growth by up to 0.9 percentage points . The report calls for structural reforms in land, labour, and capital markets , as well as greater investment in research and innovation , to sustain long-term momentum.

Exam Pointers

• India to become 3rd-largest global economy by 2028 .

• Projected GDP growth: 6.5% (FY28–30E).

• Current account deficit: ~1.2% of GDP (FY27E).

• Inflation: 4.3% (FY27).

• Key economist: Tanvee Gupta Jain (UBS).

Outlook

UBS concludes that India’s rise reflects its macroeconomic resilience, expanding middle class, and reform-driven policy ecosystem . If the current trajectory continues, India will not only cement its status as a major growth engine for the global economy but also emerge as a key pillar of stability in the evolving world economic order.