India is set to overtake Japan — and, yes, California — and become the world’s fourth-largest economy

Economic Performance - India's economy has achieved a gross domestic product of $4.18 trillion, surpassing Japan and California [1] - The second-quarter GDP growth rate for India was 8.2%, while Japan is forecasted to grow at 1.3% in 2026, indicating India's growth trajectory [2] Stock Market Performance - The benchmark domestic index in India has only delivered a 9.72% return in 2025, significantly underperforming the 30% increase of the MSCI emerging-markets index [3] - The New York-listed Indian exchange-traded fund INDA has risen by only 2% in 2025 [3] Valuation and Investment Sentiment - India's price-to-earnings ratio stands at 24 times, the highest in emerging markets and second only to the U.S. at nearly 27 times, indicating expensive valuations [5] - Current investment trends are favoring technology and cheaper markets, with trade disputes and geopolitical issues affecting sentiment towards India [6] Long-term Outlook - Despite current challenges, the scale of investment opportunities in India remains compelling, with inflation at historic lows and potential for interest rate cuts by the Reserve Bank of India [7]