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India will become the world’s third-largest economy by 2030, S&P Global Ratings said on Tuesday as it forecast the nation’s GDP growth reaching 7% in the 2026-27 fiscal year.

In its Global Credit Outlook 2024, S&P saw a 6.4% GDP growth in the fiscal year through March 2024 (2023-24) as compared to 7.2% in the previous financial year.

The growth rate will remain at 6.4% in the next fiscal (2024-25) before climbing to 6.9% in the next and 7% in 2026-27, the rating agency said. “We see India reaching 7% in 2026-27 fiscal.”

“India is set to become the third-largest economy by 2030, and we expect it will be the fastest growing major economy in the next three years,” S&P said.

India currently is the fifth-largest economy in the world behind the US, China, Germany and Japan.

“A paramount test will be whether India can become the next big global manufacturing hub, an immense opportunity. Developing a strong logistics framework will be key in transforming India from a services-dominated economy into a manufacturing-dominant one,” it said.

Unlocking the labour market potential will largely depend upon upskilling workers and increasing female participation in the workforce.

“Success in these two areas will enable India to realize its demographic dividend,” it said.

S&P said a booming domestic digital market could also fuel expansion in India’s high-growth startup ecosystem during the next decade, especially in financial and consumer technology.

In the automotive sector, India is poised for growth, building on infrastructure, investment, and innovation, it added.