India for case solvers
Size, growth, structure, consumers, the state and regulators, the 2024 to 2026 shifts (rate cuts, GST, labour codes, trade) and what they mean in a case.
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Key takeaways
- India is the fastest-growing large economy: about USD 3.9 trillion of output and 1.46 billion people in 2025, growing about 7 to 8 percent a year in real terms.
- IT and business services exported to the world, and the global capability centres that large foreign firms run in Indian cities.
- Consumer goods, food and retail, sold mostly through millions of small neighbourhood shops (general trade) as well as supermarkets and quick-delivery apps.
- Banking, insurance and payments, with fast growth in digital payments and lending.
Key idea
India is the fastest-growing large economy: about USD 3.9 trillion of output and 1.46 billion people in 2025, growing about 7 to 8 percent a year in real terms. But income per person is still low, about USD 2,680, and nearly two thirds of people live outside cities. Most India cases turn on price points, reach beyond the big cities, and rules set by the state.
Size and growth
| Economy | GDP 2025 (USD billions) | Real growth 2025 (percent) | Real growth 2026, projected (percent) | GDP per person 2025 (USD) | Population 2025 (millions) | Inflation 2025 (percent) |
|---|---|---|---|---|---|---|
| India (fiscal year April to March) | 3,916 | 7.6 | 6.5 | 2,680 | 1,463.9 | 2.1 |
| World | 118,175 | 3.4 | 3.1 | 14,710 | 8,031.1 | 4.1 |
Source: IMF World Economic Outlook database, April 2026 (2025 values are IMF estimates; 2026 values are projections), checked 2026-10-01. GDP in current US dollars at market exchange rates. The IMF shows India on its fiscal year, so 2025 means April 2025 to March 2026.
So-what
India is about a thirtieth of the world economy in dollars but grows more than twice as fast as the world in real terms.
India's statistics ministry (MoSPI) moved its GDP figures to a new base year, 2022-23, in February 2026, which updates the weights and data behind the numbers. On that basis, real GDP grew 7.7 percent in fiscal year 2025-26, and GDP in current prices reached INR 346.36 lakh crore (a lakh crore is one trillion rupees), up 8.9 percent. The IMF's July 2026 update projected 6.4 percent real growth for fiscal year 2026-27, supported by strong momentum in private consumption and services.
India's nominal GDP grew 8.9 percent in fiscal year 2025-26 and real GDP grew 7.7 percent. Using the exact formula, roughly how much did prices across the economy rise, in percent?
Structure of the economy
By the World Bank's 2025 figures, services make up 49.3 percent of India's GDP, industry (including construction) 25.2 percent, of which manufacturing 13.5 percent, and agriculture 16.2 percent. Exports of goods and services equal 22.3 percent of GDP. Agriculture's share of output is small next to the share of people who depend on it, which is why rural incomes, rainfall and crop prices move consumer demand.
Sectors that come up in India cases
- IT and business services exported to the world, and the global capability centres that large foreign firms run in Indian cities.
- Consumer goods, food and retail, sold mostly through millions of small neighbourhood shops (general trade) as well as supermarkets and quick-delivery apps.
- Banking, insurance and payments, with fast growth in digital payments and lending.
- Cars and two-wheelers, pharmaceuticals (especially generic medicines), telecom, power and infrastructure.
Consumers and income
India is young: 24.2 percent of people are under 15 and 7.4 percent are 65 or older (World Bank, 2025), and the fertility rate was 1.96 births per woman in 2024, just under the level that keeps a population stable. Only 35.7 percent of people live in urban areas. Spending is modest: in the government's Household Consumption Expenditure Survey for 2023-24, average spending per person per month was INR 4,122 in rural India and INR 6,996 in urban India.
In 2023-24, average monthly spending per person was INR 6,996 in urban India and INR 4,122 in rural India. How many times the rural figure is the urban figure?
The state and the regulators
- Reserve Bank of India (RBI): the central bank and banking regulator; sets the repo rate.
- Securities and Exchange Board of India (SEBI): stock markets and listed companies. Competition Commission of India (CCI): mergers and competition.
- GST Council: the body of the central and state governments that sets the goods and services tax rates.
- Sector regulators for telecom, insurance and power, and state governments, which control land, many licences and some taxes. Foreign investment rules set which sectors foreign firms may own and up to what share.
What changed in 2024 to 2026
- Interest rates fell: the RBI cut the repo rate by a total of 1.25 percentage points between February and December 2025, to 5.25 percent, and held it there through its August 2026 meeting.
- GST was simplified: from 22 September 2025 most goods moved to two main rates, 5 percent and 18 percent, with a special 40 percent rate for a short list of goods judged harmful or luxury.
- New GDP figures: the base year moved from 2011-12 to 2022-23 in February 2026.
- Four labour codes, which bring together 29 older labour laws, took effect on 21 November 2025, changing rules on wages, social security and hiring.
- Trade: the India and UK trade agreement came into force on 15 July 2026. In the United States, Indian goods now face a 10 percent tariff under the July 2026 Section 301 action, after an agreement in February 2026 had already cut the earlier US tariffs.
What this means in a case
- Price points and pack sizes decide volume. With average rural spending of about INR 4,100 a person a month, small packs and low ticket prices open the mass market; premium products sell mainly in the top cities.
- The route to market is a case in itself. Most people live outside cities and buy from small local shops, so distribution reach (how many shops stock you) often matters more than advertising.
- Check the rules before the economics. Sector caps on foreign ownership, state-level licences and GST rates can change the answer; a GST cut from 18 to 5 percent lowers the shelf price of a product by about 11 percent if passed on in full.
A product costs INR 100 before tax. Its GST rate falls from 18 percent to 5 percent and the cut is passed on in full. By what percent does the shelf price fall?
An Indian consumer goods client wants to grow in rural India. Which question matters most first?
Sources for this lesson (23)
- IMF World Economic Outlook database, April 2026: GDP at current prices, USD billions (IMF DataMapper, indicator NGDPD)
- IMF World Economic Outlook database, April 2026: real GDP growth, annual percent change (IMF DataMapper, indicator NGDP_RPCH)
- IMF, World Economic Outlook Update, July 2026: "Global Economy in Crosscurrents of War and Technology" (Table 1 and text)
- Ministry of Statistics and Programme Implementation (MoSPI), Press Note on GDP estimates for Q4 2025-26 and Provisional Estimates for FY 2025-26
- Press Information Bureau, Government of India: GDP base year revised from 2011-12 to 2022-23, estimates released 27 February 2026
- World Bank, World Development Indicators: services, value added, percent of GDP
- World Bank, World Development Indicators: industry (including construction), value added, percent of GDP
- World Bank, World Development Indicators: agriculture, forestry and fishing, value added, percent of GDP
- World Bank, World Development Indicators: manufacturing, value added, percent of GDP
- World Bank, World Development Indicators: exports of goods and services, percent of GDP
- World Bank, World Development Indicators: urban population, percent of total (2025 values)
- World Bank, World Development Indicators: population aged 0 to 14, percent of total (2025 values)
- World Bank, World Development Indicators: population aged 65 and above, percent of total (2025 values)
- World Bank, World Development Indicators: fertility rate, births per woman (2024 values)
- Press Information Bureau, Government of India: Household Consumption Expenditure Survey 2023-24, average monthly per capita spending
- Reserve Bank of India, Monetary Policy Statement, August 2026 (repo rate held at 5.25 percent)
- Reserve Bank of India, Monetary Policy Statement, 5 December 2025 (repo rate cut by 25 basis points to 5.25 percent)
- Reserve Bank of India, Monetary Policy Report, April 2026 (cumulative reduction of 125 basis points since February 2025)
- Press Information Bureau, Government of India: recommendations of the 56th GST Council meeting, September 2025 (rates of 5 and 18 percent from 22 September 2025)
- Press Information Bureau, Government of India: the four Labour Codes made effective from 21 November 2025
- GOV.UK, "Historic UK-India free trade agreement is now in effect", July 2026
- The White House, fact sheet on the United States and India trade deal, February 2026 (reciprocal tariff cut from 25 to 18 percent; additional 25 percent removed)
- Federal Register, Notice of actions in Section 301 investigations of various economies, 28 July 2026 (10 percent on products of India)
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