India’s economy remains a major topic of global discussion in 2025. Recent US tariffs and political remarks have sparked debates on India’s economic health. Despite criticism, data shows India’s economy has expanded over the past three decades. This article explores India’s economic growth, challenges, and global standing.
Recent Trade Disputes and Tariffs
Recently, the US imposed 25% tariffs on Indian goods. It also threatened penalties on India for buying military and energy supplies from Russia. US President Donald Trump described India’s economy as dead, sparking debate. Indian leaders defended the economy, citing rapid growth and rising global influence.
India’s Economic Growth Over 30 Years
India’s GDP has grown nearly twelvefold from 1995 to 2025. It ranks among the fastest-growing major economies globally. Only China and Russia have shown higher relative growth compared to the US during this period. India’s share of the global economy increased from less than 5% to almost 14%.
Comparison with Other Major Economies
While India’s economy expanded rapidly, many Western economies grew more slowly or stagnated. The US economy quadrupled in size, but the UK and Germany grew less than threefold. Japan’s GDP in 2025 is actually lower than in 1995, indicating economic decline. India’s growth contrasts sharply with these trends.
Growth Rate and Structural Challenges
India’s growth rate has slowed since 2011-12. It averaged 6% after 2014, down from 8-9% before the 2008 financial crisis. India’s growth pace lags behind China’s rapid expansion in the early 2000s. Manufacturing growth is weak, trailing agriculture. This limits structural transformation and job creation.
Trade and Export Performance
India’s global export share remains modest. It accounts for only 1.8% of global goods exports and 4.5% of services exports. Protectionist policies shield vulnerable sectors. The farm economy faces distress with many farmers at subsistence levels. Limited manufacturing growth slows export diversification.
Social and Developmental Concerns
Economic growth has been uneven and poorly distributed. Poverty remains high with 24% of the population below the World Bank poverty line. Inequality has increased, and human development indicators lag. There is a skills mismatch, rising unemployment, and low female workforce participation. Wages remain stagnant for many workers.
Future Prospects and Economic Position
Despite challenges, India is projected to become the world’s third-largest economy soon. Its young and skilled workforce drives innovation and competitiveness. Continued reforms and investment in manufacturing and education are crucial for sustained growth. India remains a key player in the global economy.
Questions for UPSC:
- Critically examine the impact of international trade tariffs on emerging economies like India with reference to global trade relations.
- Discuss the factors responsible for the rapid economic growth of India and China since the 1990s and compare their developmental models.
- Explain the challenges of inclusive growth in India and how social inequalities affect economic development.
- With suitable examples, discuss the role of manufacturing and agriculture in India’s economic transformation and employment generation.
