India Set To Become 3rd-Largest Economy By 2028, Powered By States Driving $10.6 Trillion Growth By 2035: Morgan Stanley

Morgan Stanley projects that India will become the third-largest economy in the world by 2028. It expects the Indian economy to more than double in size to $10.6 trillion by 2035.

The report states that Maharashtra, Tamil Nadu, Gujarat, Uttar Pradesh and Karnataka may each reach nearly $1 trillion in GDP. These states could rank among the top 20 global economies between 2030 and 2035.

“As per the latest data, Maharashtra, Gujarat, and Telangana lead the states. Chhattisgarh, Uttar Pradesh and Madhya Pradesh have shown major gains in the past five years,” the report highlighted.

States to Drive Economic Growth

India will contribute a fifth of global growth in the next decade. It will also become a key source of earnings for multinational firms.

“India’s 28 states and Union Territories play a critical role. States compete for investment by creating favourable policies and incentives. They ease the business environment because every factory or business sets up in a state,” said Morgan Stanley economists.

They added that states have separate political cycles and mandates that affect growth. States also control many factors of production by law.

“The success of competitive federalism will decide if India becomes a factory to the world. It will also decide if per capita income doubles in seven years and if the stock market stays strong,” the report stressed.

States hold key power in India’s journey to a $10.5 trillion economy by 2035. Their policies will shape India’s rise as a manufacturing hub.

The Central government has doubled capital expenditure to 3.2 per cent of GDP in FY2025 from 1.6 per cent in FY2015. This push has driven massive infrastructure growth across states.

“Highways rose by 60 per cent, airports doubled, and the metro network quadrupled. Central programmes like PM Gati Shakti, National Infrastructure Pipeline, Bharatmala, Sagar Mala and UDAN have advanced alongside state plans,” the report stated.

States work with the Centre on these projects. They also lead investments in power, water and urban development, the report added.