India's Economic Ascent: Can It Compete with Japan's Wealth?

India is poised to become the world's fourth-largest economy, yet it faces significant challenges in GDP per capita compared to Japan. Former WEF MD Claude Smadja emphasizes the need for reforms to ensure that economic growth benefits all citizens, not just the middle class. With a unique advantage in big data, India must protect this asset to drive technological innovation. As the country aims for a USD 7-trillion economy by 2030, boosting manufacturing and enhancing R&D are crucial for sustainable growth. Discover the insights and recommendations for India's economic future.
 | 
India's Economic Ascent: Can It Compete with Japan's Wealth?

India's Economic Growth and Challenges


New Delhi: India is on track to surpass Japan, positioning itself as the fourth-largest economy globally. However, former WEF Managing Director Claude Smadja cautions against complacency, highlighting that India still lags significantly behind Japan in terms of GDP per capita.


As per the IMF's April 2025 data, India's GDP per capita stands at USD 2,878.4, which is roughly 8.5% of Japan's USD 33,955.7. This indicates that Japan's per capita income is approximately 11.8 times greater than that of India.


Smadja remarked, "While the size of the economy is a useful metric reflecting a country's global economic weight, it is the per capita GDP that truly matters. India's achievement of the fourth position is commendable, yet it should not lead to any sense of satisfaction."


He emphasized that India's new economic status should act as a catalyst for reforms aimed at improving living standards for all citizens, rather than just benefiting the growing middle class in urban and rural areas.


As the Chairman of Smadja and Smadja Strategic Advisory, Smadja noted that India is at a crucial juncture in the global technology landscape, possessing a "unique advantage" in big data. This asset must be safeguarded and strategically utilized to elevate India within the global tech and innovation hierarchy.


He pointed out that India, along with China, Europe, and the US, is among the largest data generators worldwide.


India's unique situation, characterized by extensive internet access, widespread mobile phone usage, and the Aadhaar national identity system, has led to an "exponential" increase in data generation, impacting all facets of daily life.


"It is essential for India to protect this strategic asset, as it forms the foundation for accelerating technological innovation and developing disruptive technologies, positioning the country among the top players in big data globally," Smadja stated.


He added that apart from China, no other nation possesses such a significant asset in big data.


However, this advantage also brings risks. Smadja cautioned that US tech giants and policymakers are keen to access this data, and with China restricting its data ecosystem and Europe already under scrutiny, India could become the next target.


He believes that India's data reservoir is crucial for the next wave of technological advancements, including artificial intelligence and deep tech.


Smadja urged that this resource should not only fuel elite innovation but also benefit the entire Indian populace, including those in rural and remote areas.


"India boasts a vibrant and innovative startup ecosystem. Any policies that support this development will greatly benefit the nation," he added.


He noted that until now, Indian corporations have been more inclined to acquire technologies rather than develop them. A more vigorous effort from corporate India to enhance R&D capabilities is necessary.


India's youthful demographic is a significant asset, but Smadja stressed the urgent need for accelerated skill development and reskilling across the workforce.


Looking forward, to achieve a USD 7-trillion economy by 2030, India must broaden its industrial base, Smadja asserted.


Currently, manufacturing contributes only about half to India's GDP compared to China, which is insufficient given India's size, population, and economic potential.


Without a substantial increase in manufacturing, Smadja warned that India cannot expect to achieve the economic growth necessary to reach the USD 7-trillion target.


He also highlighted the importance of enhancing R&D, fostering innovation, and boosting productivity in the rural sector.


News Hub