India’s Economy Projected to Grow at 6.7% Annually Until 2040, Says DBS Bank

India’s economy is expected to grow at an average annual rate of 6.7% between 2025 and 2040, outpacing China’s projected 3% growth, according to a report by Singapore-based DBS Bank. The report outlines base and bull case scenarios, highlighting India’s demographic advantage and investment-led growth.

Growth Projections and Scenarios

DBS projects India’s nominal GDP (rupee basis) to average 9.7% during the period. Under the base case, India’s economy could surpass $5.6 trillion by 2030 and approach $11.5 trillion by 2040. In a bull case scenario, growth could average 7.3–7.5% annually.

Per Capita Income Outlook

Per capita income is expected to exceed $3,700 within this decade and rise to $7,000 by 2040, placing India firmly in the upper-middle-income category. This improvement will be driven by demographic strength and productivity gains.

Key Growth Drivers

DBS identifies demographics and labour availability as major catalysts, contributing 1.8 percentage points to growth. Enhanced human capital through investments in education, health, sanitation, and skill development, along with improved female workforce participation, will support this trend.

Capital formation is projected to add 2.6 percentage points to growth, accounting for 40% of overall expansion. Real estate investments, government and private sector spending, and increased foreign direct investment will drive this upcycle. Infrastructure development across roads, railways, and ports will play a critical role.

Manufacturing and Structural Shifts

The manufacturing sector’s share of GDP is expected to rise from ~17% to 25% by 2047, requiring annual growth of around 15%. This shift will be supported by policy initiatives and global supply chain realignments.

Read More: India To Revise GDP, CPI, And IIP Base Years.

Conclusion

DBS Bank’s projections underscore India’s potential to sustain high growth rates through demographic advantages, capital formation, and structural reforms. With manufacturing expansion and infrastructure investments, India is positioned to become a key driver of global economic growth over the next two decades.

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