DBS Bank forecasts India to grow by an average 6.7% between 2025 and 2040

India’s economy is expected to grow at an average rate of 6.7 per cent over the 15 year period from 2025 to 2040, outpacing China and Asean countries, a report by DBS Bank has said.

“We forecast India’s economy to grow by an average 6.7 per cent from 2025 to 2040. This will outpace China’s 3 per cent average real GDP expansion in the same period, as well the ASEAN-6 region,“ said Radhika Rao, Senior Economist at DBS Bank, in a report titled, ‘India 2025-40 outlook Pivotal juncture.’  

Bull case scenario

Nominal GDP (Gross Domestic Products in Indian Rupee) is expected to average 9.7 per cent. “We also draw out a ‘bull case’ where growth could average a sharper 7.3-7.5 per cent in the same period,” she said. According to the International Monetary Fund, the size of the Indian economy touched $4.13 trillion in 2025 placing it fourth among the world’s largest economies.

If base case growth projections materialise, India’s nominal GDP  economy may pass the $5.6 trillion mark by 2030 and near $11.5 trillion by 2040. Per capita income is on course to beat $3,700 within this decade and rise to $7,000 by 2040, firmly into the upper middle income country threshold. “These are likely to be key milestones ahead of the ‘Viksit Bharat’ goalposts set by the government,” she said.

4 D growth pillars

According to Rao, India stands at a pivotal juncture where policy decisions will determine the trajectory of its economy over the next decade. Geopolitical shifts and evolving strategic alliances will play a crucial role. “We provide a four ‘D’ framework which will supplement the growth agenda towards 2040 – Development, Diversification, Digitalisation, and Decarbonisation,” she said.

Explaining 4 ‘D’, she said that through the lens of diversification, growth will be better balanced with a push to expand manufacturing and services capabilities, besides wider suite of trading partners. Development of the GIFT City will be a key priority. Digitization drive will require a balance between productivity enhancements and managing AI growth. “Managing climate change risks and green transition underscore the Decarbonisation agenda,” she said.

According to her, India is on course to be firmly in the upper middle income country threshold in a decade, in a key milestone towards Viksit Bharat goals. “Robust human capital approach is crucial to maximum dividends from favourable demographic trends,” she said.

In August 2025, S&P Global Ratings upgraded India’s sovereign rating to BBB from BBB-, marking its first upgrade in nearly 18 years. India now stands on par with Indonesia and Mexico. “This upgrade was long time in the making, given the structural improvements in the past decade. As tariff risks abate, we expect Moody’s and Fitch to also reassess the current stance and adjust the ratings higher,” Rao said.

Published on October 30, 2025