India may have just leapfrogged Japan to become the world’s fourth-largest economy, but Zerodha co-founder Nithin Kamath believes the celebration is premature.
“GDP comparisons only tell you so much,” Kamath posted on X.
“When you look at important metrics such as productivity, labor force participation, and perhaps most importantly, R&D spending, we have a long way to go.”
NITI Aayog CEO B.V.R. Subrahmanyam’s had a week back said India has crossed the $4 trillion GDP mark.
“We are the fourth largest economy as I speak,” Subrahmanyam said, citing IMF projections that place India just ahead of Japan, with only the US, China, and Germany ahead.
But Kamath pointed to the country’s chronic underinvestment in innovation as a structural weakness that could cap long-term growth. India spends just 0.7% of GDP on research and development, far below China’s 2.4%, South Korea’s 4.8%, and Israel’s 6%.
“One of the biggest long-term challenges for Indian growth is this chronically low R&D spending,” he warned. “This is both a government problem and a private sector problem. It’s unfair to expect the government alone to solve this.”
Kamath emphasized that sustainable growth in an AI-driven and geopolitically fragmented world will require more than GDP gains. “We won’t realize our potential unless we build an ecosystem that invests in education and research,” he wrote.
“Without this,” Kamath added, “we’ll lose our best minds to other countries and miss the opportunity to truly capitalize on our demographic dividend.”
India’s per capita income has doubled over the past decade, from $1,438 in 2013–14 to a projected $2,880 in 2025, according to IMF data. But Kamath suggests this progress may stall unless deeper reforms take hold.
“This isn’t an easy fix,” he said. “It takes long-term commitment to transform education, streamline regulations, and create the right incentives for innovation—so our brightest minds build in India, for India.”
