India Set to Become World’s Third-Largest Economy by 2028: UBS Report

India is set to become the world’s third-largest economy by 2028, according to a new report by UBS Global Research. The study also projects that India will rank as the third-largest consumer market by 2026, supported by steady GDP growth and rising domestic demand.

Growth and Consumption Trends

UBS expects India’s real GDP to grow at an average of around 6.5% annually between FY28 and FY30. This places India behind only the U.S. and China in terms of the size of the economy. Over the past decade, household consumption has nearly doubled to $2.4 trillion in 2024, with a compound annual growth rate of 7.9%. Expanding consumer spending remains one of the main forces behind India’s rapid climb in the global economic hierarchy.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Economic Stability and Outlook

The report estimates that real GDP growth will stabilise near 6.4% in FY2027—slightly below consensus expectations—before inching up again to 6.5% the following year. Despite uncertain global conditions, India’s macroeconomic fundamentals are likely to stay resilient. Inflation is projected to edge higher but remain within manageable limits and the current account deficit is expected to stay moderate at around 1.2% of GDP in FY27.

Equity Market View

While the long-term outlook is upbeat, UBS notes that Indian equities are relatively expensive at current valuations. Investors may need to stay cautious and factor in the high price-to-earnings ratios when assessing opportunities. Still, the country’s strong growth story and structural tailwinds continue to draw investor interest across sectors.

India’s Rising Global Position

By 2026, India is on track to overtake several major economies to become the world’s third-largest consumer market—two years before reaching the same position in overall GDP size. This transition highlights the impact of its young population, rising urbanisation, and policy efforts that continue to boost domestic spending and business activities.

According to UBS, India is set to become the third-largest economy globally by 2028, driven by steady GDP expansion and a rapidly growing consumer base. While the long-term prospects remain strong, the report notes that stock valuations are already high, suggesting investors should stay selective and manage expectations in an otherwise resilient and fast-evolving market.