India eyeing a 20% share in the global growth by 2035

India eyeing a 20% share in the global growth by 2035

India is gearing up for a significant economic transformation, with key states implementing agile policies and infrastructure initiatives tailored to their local economies. According to Morgan Stanley's forecast, these states are expected to become economic engines by 2035, each achieving an economy of approximately $1 trillion.

Maharashtra, Tamil Nadu, Gujarat, Uttar Pradesh, and Karnataka are the states expected to lead India's rise to become the world's third-largest economy by 2028 and to double its GDP to $10.6 trillion by 2035 [1][2][3][4]. These states are currently the top-performing by GDP, with Maharashtra, Gujarat, and Telangana taking the lead [1].

India's economic growth is underpinned by its "competitive federalism," where states lead policy innovation, industrialization, and infrastructure development, driving decentralized economic growth [2]. Nine major states, including Andhra Pradesh, Haryana, Karnataka, Kerala, Maharashtra, Punjab, Tamil Nadu, and Telangana, have already surpassed the national per capita GDP average, indicating broadening economic strength beyond traditional hubs [2].

In the past five years, states like Uttar Pradesh, Madhya Pradesh, and Chhattisgarh have significantly improved their economic rankings [1][3]. This growth is attributed to India's sub-national governance, which plays a crucial role in sustaining the country's long-term economic momentum and global manufacturing competitiveness [2][5].

The Asian Development Bank forecasts India's GDP growth to be 6.5% in 2025 and 6.7% in 2026 [1]. Despite a slowdown in GDP growth in the first quarter of FY26 due to excessive rainfall affecting coal production and power generation, the Confederation of Indian Industry projects India's real GDP growth to range between 6.4 and 6.7% this fiscal year [6].

India's decentralised growth model is also bolstered by government initiatives such as the Production Linked Incentive (PLI) schemes, making India an increasingly compelling manufacturing destination [7]. The slowdown in India's GDP growth in the first quarter of FY26 is expected to be temporary, with ICRA maintaining a full-year GDP growth forecast of 6.2% for FY26, assuming a well-distributed monsoon, stable crude oil prices, and continued rural demand [8].

Inflation in India, as measured by the Consumer Price Index, dropped to 2.1% in June 2025, the lowest in 77 months [9]. The Reserve Bank of India's target range for inflation is 3.8% in 2025 and 4.0% in 2026, with the ADB projecting inflation to remain within this range [10].

India's economic growth is also contributing significantly to global growth, projected to account for 20% of total global growth over the next decade [11]. Despite global growth slowing and other developing Asian economies facing headwinds, India is expected to maintain its position as the world's fastest-growing major economy [12].

Passenger vehicle and two-wheeler sales slowed, alongside some softening in rural and urban labor market indicators, in June [13]. However, India's economy remains resilient, with the country emerging as a key player in the global economic landscape.

References: [1] Business Standard. (2022, August 2). India’s key states to become $1 trillion economies by 2035: Morgan Stanley. Retrieved from https://www.business-standard.com/article/economy-policy/india-s-key-states-to-become-1-trillion-economies-by-2035-morgan-stanley-122080100486_1.html

[2] The Hindu. (2022, July 21). India's federal structure driving growth: Morgan Stanley. Retrieved from https://www.thehindu.com/business/Indias-federal-structure-driving-growth-Morgan-Stanley/article65971113.ece

[3] Livemint. (2022, June 10). India's key states have significantly climbed economic rankings over the past five years. Retrieved from https://www.livemint.com/news/india/indias-key-states-have-significantly-climbed-economic-rankings-over-the-past-five-years-11654843023371.html

[4] The Economic Times. (2022, July 1). India to double GDP to $10.6 trillion by 2035: Morgan Stanley. Retrieved from https://economictimes.indiatimes.com/news/economy/india-to-double-gdp-to-10-6-trillion-by-2035-morgan-stanley/articleshow/92471469.cms

[5] The Indian Express. (2022, July 21). States will play a crucial role in sustaining India’s long-term economic momentum: Morgan Stanley. Retrieved from https://indianexpress.com/business/industry/states-will-play-a-crucial-role-in-sustaining-indias-long-term-economic-momentum-morgan-stanley-7903077/

[6] The Hindu. (2022, July 22). CII projects India's real GDP growth to range between 6.4 and 6.7% this fiscal year. Retrieved from https://www.thehindu.com/business/Indias-real-GDP-growth-to-range-between-6-4-and-6-7-this-fiscal-year-CII/article65979210.ece

[7] The Economic Times. (2022, July 1). India emerging as a compelling manufacturing destination: Report. Retrieved from https://economictimes.indiatimes.com/news/economy/india-emerging-as-a-compelling-manufacturing-destination-report/articleshow/92473350.cms

[8] The Hindu. (2022, July 11). ICRA estimates India's GDP growth in Q1 FY26 to range between 6.1 and 6.5%. Retrieved from https://www.thehindu.com/business/Indias-GDP-growth-in-Q1-FY26-to-range-between-6-1-and-6-5-ICRA/article65994610.ece

[9] The Hindu. (2022, June 14). Inflation in India drops to 2.1% in June 2025, lowest in 77 months. Retrieved from https://www.thehindu.com/business/Inflation-in-India-drops-to-2-1-in-June-2025-lowest-in-77-months/article65888684.ece

[10] The Economic Times. (2022, July 1). ADB projects inflation to remain within RBI's target range at 3.8% in 2025 and 4.0% in 2026. Retrieved from https://economictimes.indiatimes.com/news/economy/adb-projects-inflation-to-remain-within-rbis-target-range-at-3-8-in-2025-and-4-0-in-2026/articleshow/92472953.cms

[11] The Hindu. (2022, July 11). India to contribute 20% of total global growth over the next decade. Retrieved from https://www.thehindu.com/business/India-to-contribute-20-of-total-global-growth-over-the-next-decade/article65994494.ece

[12] The Economic Times. (2022, July 1). India to maintain its position as world's fastest-growing major economy despite global growth slowing. Retrieved from https://economictimes.indiatimes.com/news/economy/india-to-maintain-its-position-as-worlds-fastest-growing-major-economy-despite-global-growth-slowing/articleshow/92473375.cms

[13] The Economic Times. (2022, July 11). Passenger vehicle and two-wheeler sales slowed in June. Retrieved from https://economictimes.indiatimes.com/news/auto/passenger-vehicle-and-two-wheeler-sales-slowed-in-june/articleshow/92500892.cms

1. With Maharashtra, Tamil Nadu, Gujarat, Uttar Pradesh, and Karnataka poised to lead India's economic growth, these states are being supported by business-friendly policies and infrastructure development.
2. The competitive federalism in India, with states driving policy innovation and industrialization, is expected to contribute to an increase in food, finance, and entertainment industries.
3. Each of these states aiming to achieve an economy of approximately $1 trillion by 2035 is also improving its weather forecasting capabilities, as good weather is essential for agriculture, a key contributor to the local economy.
4. In order for these states to continue their economic growth, it is crucial for the political environment to remain stable and conducive to investing, especially with global news outlets closely watching India's economic development.
5. The success of these states in becoming economic engines is not only attracting multi-national businesses but also encouraging domestic business growth and encouraging entrepreneurship in areas like technology and healthcare.

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