India is on track to become the world&rsquo;s third largest economy by 2028, and could see its GDP soar to $10.6 trillion by 2035, according to a recent report from Morgan Stanley. The financial major anticipates India will drive 20% of global economic growth in the next decade, positioning itself as a major global engine of expansion.
A key insight from the report is the transformative role of Indian states, with up to five states&mdash;Maharashtra, Tamil Nadu, Gujarat, Uttar Pradesh, and Karnataka&mdash;likely to reach nearly $1 trillion economies individually by 2035, each ranking among the top 20 global economic regions.
The report underscores how states are becoming pivotal growth centers, not just contributing to the national GDP, but also competing to attract global investments. These states have shown increasing initiative in areas like ease of doing business, infrastructure investment, and policy incentives, making them crucial stakeholders in India&rsquo;s development story.
Recent government efforts to boost infrastructure spending have paid dividends. The Centre&rsquo;s capital expenditure has doubled over the past decade to 3.2% of GDP in FY2025 from 1.6% in FY2015. As a result, India has seen a 60% increase in highways, a doubling of airports, and a fourfold expansion of metro rail systems.
Flagship projects like PM Gati Shakti, Bharatmala, Sagar Mala, UDAN, and the National Infrastructure Pipeline have further amplified this growth, often implemented in close collaboration with state governments.
Interestingly, the report highlights Chhattisgarh, Uttar Pradesh, and Madhya Pradesh as states that have shown significant economic acceleration in recent years. Meanwhile, Maharashtra, Gujarat, and Telangana remain among the most economically dominant.
Morgan Stanley analysts emphasize that India&rsquo;s federal framework, where states control critical aspects like land, labor, and utilities, plays a defining role. The ability of each state to attract investment and foster industry will be decisive in determining whether India becomes a manufacturing powerhouse and achieves sustained stock market growth.
The report concludes that if these trends continue, India could not only double its per capita income by 2035, but also redefine its role as a global economic leader.

India Set to Become 3rd Largest Economy by 2028

India may hit $10.6 trillion GDP by 2035, driven by state-level growth: Morgan Stanley

India Set to Become 3rd Largest Economy by 2028

India may hit $10.6 trillion GDP by 2035, driven by state-level growth: Morgan Stanley

July 23, 2025 | 13:46 IST