IMF Affirms India’s Economic Strength as Trump Targets Tariffs

Despite punitive US tariffs, India’s economy continues to demonstrate impressive resilience. According to the IMF, India is already the world’s third-largest economy by purchasing power parity (PPP), with a nominal GDP exceeding $4 trillion. Projections indicate that sustained growth could see India overtake the US in PPP terms by 2040, cementing its position as a major global economic power.

During a high-level press briefing in Washington, President Donald Trump was asked why steep tariffs were being imposed on India instead of China, which imports significantly more Russian oil. After a brief pause, Trump sidestepped the question and moved on.

That deflection risks obscuring a critical point: India’s economic clout is too significant to ignore. While its nominal GDP stands at about $4.19 trillion—placing it fifth globally—the International Monetary Fund (IMF) ranks India as the world’s third-largest economy by purchasing power parity (PPP), valued at roughly $17.65 trillion.

Understanding the numbers:
The IMF’s PPP ranking adjusts GDP figures using exchange rates that account for the relative buying power of currencies, factoring in price differences in key sectors like services and non-tradables. These rates tend to be more stable than volatile market exchange rates and provide a clearer picture of economic welfare.

Strong growth ahead:
India’s economy is projected to grow between 6–7% annually in the coming years, compared to about 2% for the US. If this trend holds, India’s GDP in PPP terms could equal or surpass that of the United States by 2040. Per capita income (PPP), currently $12,132, is also expected to rise sharply with sustained growth.

Policy considerations:
Targeting India with tariffs may be short-sighted. With its demographic advantage, robust growth outlook, and vast PPP economy, India is more resilient—and influential—than often perceived. Focusing solely on nominal GDP underestimates its expanding domestic purchasing power and its emerging global weight. The US may be misjudging India’s position—not just in scale, but in its long-term influence and staying power.