India is projected to become the world's third-largest economy by 2028, according to a recent report by Morgan Stanley. The report forecasts India's GDP will more than double to $10.6 trillion by 2035. This growth trajectory highlights the critical role of states and union territories in propelling India's economic ascent.

Morgan Stanley's economists emphasize that India's 28 states and 8 Union Territories are crucial to achieving this ambitious growth. States manage their finances and actively compete for investments by creating policies and improving business conditions. The report noted that ultimately, every business or factory is established in a specific state. This "competitive federalism," where states compete for investment through their own policies, is a significant factor driving India's rapid rise in the global economic rankings. The success of this competitive environment will determine whether India can evolve into a global manufacturing hub, double its per capita income within seven years, and sustain its capital market momentum.

Several states are expected to achieve a $1 trillion economy by 2035, potentially ranking them among the top 20 global economies. Maharashtra, Tamil Nadu, Gujarat, Uttar Pradesh, and Karnataka are likely to reach this milestone. The top three states based on the latest data are Maharashtra, Gujarat, and Telangana. States like Chhattisgarh, Uttar Pradesh, and Madhya Pradesh have demonstrated significant improvements in their rankings over the past five years.

Over the past decade, infrastructure spending has seen a major boost. The central government's capital expenditure has doubled from 1.6% of GDP in FY15 to 3.2% in FY25. Consequently, highway networks have expanded by 60%, the number of airports has doubled, and metro rail systems have quadrupled.

India is poised to contribute 20% of global growth over the next decade and is emerging as a key driver of earnings for multinational corporations. Morgan Stanley's report indicates that India's economy is undergoing a significant upgrade, projecting an increase from $3.5 trillion in 2023 to $5.7 trillion by 2028. This would position India as the world's third-largest economy, surpassing Germany. By 2035, India's economy is expected to double again, reaching $10.6 trillion and securing a larger share of global GDP.