Zerodha co-founder Nithin Kamath struck a cautionary note on Tuesday as India surpassed Japan to become the fourth largest economy in the world. New Delhi is poised to have a GDP of $4.19 trillion in 2025 — with top officials predicting that might even surpass Germany within three years. The businessman however opined that GDP companies may not be telling the whole story.
“When you look at important metrics like productivity, labor force participation, and perhaps most importantly, R&D spending, we have a long way to go. India spends just 0.7% of GDP on R&D, while China spends 2.4%, South Korea 4.8%, and Israel 6%…One of the biggest long-term challenges for Indian growth is this chronically low R&D spending,” he wrote on X. Kamath also noted that existing habits and patterns followed by India may not work “an increasingly fragmented world and an uncertain future that might be shaped by AI”. The lengthy post also cited data to add that it was as much a government problem as it was a private sector issue.
“Unless we build an ecosystem that invests in education and research, not only will our best minds leave India, but higher long-term growth rates will remain out of reach. We’ll also miss out on taking advantage of our demographic dividend. This isn’t an easy fix.
It requires long-term efforts to transform education, streamline regulations, and create an environment with the right incentives for India’s brightest minds to discover and build in India, for India. Without this, we’ll never truly realize our potential,” he added. It's amazing that despite all the challenges, we're now the 4th largest economy in the world.
Having said that, at the risk of sounding like a spoilsport, GDP comparisons only tell you so much. When you look at important metrics like productivity, labor force participation, and… pic.twitter.com/SWUhltKEja — Nithin Kamath (@Nithin0dha) May 27, 2025 India had been the fifth-largest economy in the world till 2024. According to the World Economic Outlook report released by the International Monetary Fund in April, the country is projected to have a GDP of $4.19 trillion in 2025.
The nominal GDP for FY26 is expected to be marginally more than the likely GDP of Japan which is estimated at USD 4.187 billion. The per capita income of India has doubled from $1,438 in 2013-14 to $2,880 in 2025. The IMF report also said the Indian economy is projected to grow at 6.2% in 2025-26 (slower than earlier estimated rate of 6.5%) due to escalated trade tensions and global uncertainty.
“We are the fourth largest economy as I speak. We are a $4 trillion economy as I speak, and this is not my data. This is IMF data.
India today is larger than Japan. It’s only the United States, China, and Germany which are larger, and if we stick to, you know, what is being planned, what is being thought through, it’s a matter of another 2, 2.5 to 3 years; we would become the third largest economy,” NITI Aayog CEO BVR Subrahmanyam said on Sunday morning.
