28 Aug 2025 : Amid global uncertainties and US tariffs, good news has come for India. According to a recent report by UK-based accounting firm EY, India is on track to become the world’s second-largest economy on the basis of Purchasing Power Parity (PPP) in the coming years.
As per the report, India’s GDP in PPP terms stood at $14.2 trillion in FY 2024-25, which is about 3.6 times larger than its economy measured at market exchange rates. If India maintains an average growth rate of 6.5% and the US at 2.1%, India’s GDP could reach $34.2 trillion by 2038. During this period, India could also surpass Germany by 2028 to become the third-largest economy at market exchange rates.
According to EY India’s Chief Policy Advisor, D.K. Srivastava, “India’s strengths such as a young and skilled workforce, high savings and investment rates, and a sustainable debt profile will help the country maintain a high growth rate despite global volatility.”
Impact of US Tariffs
However, the report also carries a warning: the US imposing a 50% import tariff could negatively affect India’s GDP. It is estimated that this could cause a 0.9% reduction in GDP, though appropriate policy measures could reduce the impact to just 0.1%. The tariffs would mainly affect exports worth over $48 billion, including textiles, gems & jewelry, shrimp, leather, footwear, and machinery. However, pharmaceuticals, energy, and electronic goods would remain outside the tariff’s ambit.
Summary: Positive news for India: UK report projects India to overtake major economies, becoming the world’s second-largest economic powerhouse soon.