Indus Valley Civilisation, the early civilisation ofIndia andPakistan, developed the economy of agriculture and craft which later spread into central India.^[15]Angus Maddison estimates that from 1-1000 AD, the regions making up the present-day India contributed roughly 30% of the world's population and GDP.^[16]

India experienced per-capitaGDP growth in thehigh medieval era.^[17] By the late 17th century, most of the Indian subcontinent had been united under theMughal EmperorAurangzeb, which for a time Maddison estimates became the largest economy and manufacturing power in the world, producing about a quarter of global GDP, before fragmenting and being conquered over the next century.^[18]

Until the 18th century, India was one of the most importantmanufacturing centers ininternational trade.^[19] This growth of manufacturing has been seen as a form ofproto-industrialization, similar to 18th-centuryWestern Europe prior to theIndustrial Revolution.^[20] Indian subcontinent went through a period of deindustrialization in the latter half of the 18th century as an indirect outcome of the collapse of the Mughal Empire, and that British rule later caused further deindustrialization.^[21]

India experienceddeindustrialisation and cessation of various craft industries under British rule,^[22] which along with fast economic and population growth in theWestern world, resulted in India's share of the world economy declining from 24.4% in 1700 to 4.2% in 1950,^[23] and its share of global industrial output declining from 25% in 1750 to 2% in 1900.^[22] Due to its ancient history as a trading zone and later its colonial status,colonial India remained economically integrated with the world, with high levels of trade, investment and migration.^[24]

The role and scale of British imperial policy during theBritish Raj (1858 to 1947) on India's relative decline in global GDP remains a topic of debate among economists, historians, and politicians. Some commentators argue that the effect of British rule was negative, and that Britain engaged in a policy ofdeindustrialisation in India for the benefit of British exporters, which left Indians relatively poorer than before British rule. Others argue that Britain's impact on India was either broadly neutral or positive, and that India's declining share of global GDP was due to other factors, such as newmass production technologies or internal ethnic conflict.

Parts of this articlemay incorporate text from alarge language model. It may includehallucinated information,copyright violations, claims notverified in cited sources,original research, orfictitious references. Any such material should beremoved, and content with anunencyclopedic tone should be rewritten. The reason given is:Tag applies ONLY to edits made in May 2025here. NoteWP:AISIGNS in these edits in promotional tone, superficial analyses, vocab distribution typical of 2025 LLMs, etc.(January 2026) (Learn how and when to remove this message)

Theeconomy of India is adevelopingmixed economy with a notable public sector in strategic sectors.^[57] It is the world's fourth-largest economy bynominal GDP^[58] and the third-largest bypurchasing power parity (PPP); on aper capita income basis,India ranked136th by nominal GDP and119th by PPP-adjusted GDP.^[59] Fromindependence in 1947 until 1991, successive governments followed theSoviet model and promotedprotectionist economic policies, with extensiveSovietization,state intervention,demand-side economics, natural resources, bureaucrat-driven enterprises andeconomic regulation. This was a form of theLicence Raj.^[60][61][62] The end of theCold War and an acutebalance of payments crisis in 1991 led to the adoption of a broad economic liberalisation in India andindicative planning.^[63][64] India has about 1,900 public sector companies,^[65] with the Indian state having complete control and ownership of railways. While the Indian government retains ownership through theNational Highways Authority of India (NHAI), a large share of new national highway projects are now built and maintained underPublic–private partnership (PPP) models rather than being fully government‑funded.^[66][67] The government plays a major role in sectors likesupercomputing,space and shipping but private participation is growing, especially in space, telecom, and satellite communications.^[68]

Nearly 70% of India's GDP is driven by domestic consumption;^[69] the country remains the world'sthird-largest consumer market.^[70] Aside from private consumption, India's GDP is also fueled by government spending, investments, and exports.^[71] As of 2025, India is the world's7th-largest importer and the10th-largest exporter.^[72] India is often described as the “pharmacy of the world,” supplying around one-fifth of global demand for generic medicines and exporting pharmaceuticals to over 200 countries in 2023–24, with approximately 70% of exports destined for highly regulated markets such as North America and Europe.^[73][74] In the United States, Indian pharmaceutical companies supply nearly half of all generic prescriptions by volume.^[75][76] India is also the largest vaccine manufacturer globally by volume, accounting for over 60% of the world’s vaccine production.^[77] India has been a member of theWorld Trade Organization since 1 January 1995.^[78] It ranks 41st on theGlobal Competitiveness Index and 39th inGlobal Innovation Index.^[79][80] As of 2025, India ranks third in the world intotal number of billionaires.^[81] According to theWorld Bank, India's Gini index fell to 25.5 in 2022‑23, making it the fourth-most equal country globally, suggesting significant progress in income equality.^{[82][83][84][85]} Economists and social scientists often consider India awelfare state.^{[86][87][88][89]} India's overallsocial welfare spending stood at 8.6% of GDP in 2021-22.^[90][91]

With 607 million workers, India has theworld's second-largest labour force, which is growing rapidly, with 46.6 million added in 2023–24 alone.^[92][93] India’s fertility rate continues to fall sharply, from about 3.3 in 2000 to around 1.9 in 2025, below the replacement level of 2.1.^[94]Labour productivity remains lower than in advanced economies but is similar to levels observed in emerging Asian countries such as China.^[95] India’soutsourcing industry has shifted from traditional call centreBPO work, now largely handled by the Philippines and other Southeast Asian countries, to high-value software development,consultancy, engineering, and research oriented services.^[96] India hosts more than half of the world’sGlobal Capability Centres (GCCs), which perform product engineering and R&D functions.^[97] It is home to about 20% of globalsemiconductor chip design engineers and, as of early 2025, has an estimated 4.3 million software engineers, accounting for roughly 14.7% of the global software engineering workforce.^[98][99]

In 2021–22, theforeign direct investment (FDI) in India was $82 billion. The leading sectors for FDI inflows were the Finance, Banking, Insurance and R&D.^[100] India has establishedfree trade agreements and economic‑partnership with several countries and regional blocs, including theEuropean Union,ASEAN,SAFTA, Japan, South Korea, Australia, New Zealand, Oman and the United Arab Emirates, while also concluding agreements withEFTA (Iceland, Liechtenstein, Norway, Switzerland) and the United Kingdom. India maintains Comprehensive Economic Cooperation Agreements (CECA/CEPA) with Singapore, Malaysia, Mauritius, and Japan, and continues to negotiate or review trade agreements with partners such as Chile, Canada, Israel and theEurasian Economic Union. Additionally, India has bilateral investment and tax treaties with countries including Bangladesh, Uzbekistan, Kyrgyzstan, Belarus, and Trinidad & Tobago.^{[101][102][103][104][105][106]}

As of 2025, the service sector accounts for around 55% of GDP.^[107] India has two of the world's tenlargest stock exchanges (both bytrade volume andmarket capitalisation).^[108] According toUnited Nations Industrial Development Organization (UNIDO) India is the world'sfifth-largest manufacturer, representing 3.2% of global manufacturing output.^[109] India’s digital economy was estimated at US$402 billion in 2022–23, equal to about 11.74% of GDP, and is projected to rise to around 13.4% by 2024–25 and nearly 20% of GDP by 2029–30, with its total value expected to surpass US$1 trillion by 2029.^[110][111] Nearly 63% of India's population is rural,^[109] and contributes about 46% of India's GDP.^[112][113] India's unemployment rate remained at 3.2% in 2023–24.^[114] The labour force participation rate reached 60.1% overall, with a worker–population ratio of 58.2%.^[114] India's gross domestic savings rate stood at 29.3% of GDP in 2022.^[115]

Theeconomy of Bangladesh is considered to be a majordevelopingmixed economy.^[117] As the second-largest economy in South Asia,^[118][119]Bangladesh's economy is the34th largest in the world in nominal terms, and25th largest by purchasing power parity. Bangladesh is seen by various financial institutions as one of theNext Eleven. It has been transitioning from being afrontier market into anemerging market. Bangladesh is a member of theSouth Asian Free Trade Area and theWorld Trade Organization. In fiscal year 2021–2022, Bangladesh registered a GDP growth rate of 7.2% after the global pandemic.^[120] Bangladesh is set to graduate from the group of least developed countries and will join the group ofdeveloping countries in November 2026.^[121]

Industrialisation in Bangladesh received a strong impetus after thepartition of India due to labour reforms and new industries.^[122] Between 1947 and 1971, East Bengal generated between 70% and 50% ofPakistan's exports.^[123][124] Modern Bangladesh embarked on economic reforms in the late 1970s which promoted free markets and foreign direct investment. By the 1990s, the country had a boomingready-made garments industry. As of 16 March 2024, Bangladesh has the highest number of green garment factories in the world withLeadership in Energy and Environmental Design (LEED) certification from theUnited States Green Building Council (USGBC), where 80 are platinum-rated, 119 are gold-rated, 10 are silver, and four are without any rating.^[125] As of 6 March 2024, Bangladesh is home to 54 of the top 100 LEED Green Garment Factories globally, including 9 out of the top 10, and 18 out of the top 20.^[126] As of 27 April 2024, Bangladesh has a growingpharmaceutical industry with 12 percent average annual growth rate. Bangladesh is the only nation among the 48least-developed countries that is almost self-sufficient when it comes to medicine production as local companies meet 98 percent of the domestic demand for pharmaceuticals.^[127] Remittances from the largeBangladeshi diaspora became a vital source of foreign exchange reserves.^[128] Agriculture in Bangladesh is supported by government subsidies and ensures self-sufficiency in food production.^[129][130] Bangladesh has pursuedexport-oriented industrialisation.^[131][132]

Bangladesh experienced robust growth after the pandemic with macroeconomic stability, improvements in infrastructure, a growing digital economy, and growing trade flows.^[133] Tax collection remains very low, with tax revenues accounting for only 7.7% of GDP.^[134] Bangladesh'sbanking sector has a large amount of non-performing loans or loan defaults, which have caused a lot of concern.^[134][135] The private sector makes up 80% of GDP.^[136][137] TheDhaka Stock Exchange andChittagong Stock Exchange are the two stock markets of the country.^[138] Most Bangladeshi businesses are privately owned small and medium-sized enterprises (SME) which make up 90% of all businesses.^[139]

The economy ofPakistan is classified as adeveloping economy. It it the world's26th-largest economy by gross domestic product (GDP) based onpurchasing power parity (PPP) and the41st largest in terms of nominal GDP. As of 2025, Pakistan has a population of approximately 255.3 million. In terms of per capita income, the country ranks161st by GDP (nominal) and142nd by GDP (PPP) according to theInternational Monetary Fund (IMF).

In its early years, Pakistan's economy relied heavily on private industries. The nationalization of a significant portion of the sector, including financial services, manufacturing, and transportation, began in the early 1970s underZulfikar Ali Bhutto. DuringZia-ul Haq's regime in the 1980s, an "Islamic" economy was adopted, outlawing economic practices forbidden inSharīʿah and mandating traditional religious practices. The economy started privatizing again in the 1990s.

The economic growth centers in Pakistan are located along theIndus River; these include the diversified economies ofKarachi and major urban centers inPunjab (such asFaisalabad,Lahore,Sialkot,Rawalpindi, andGujranwala), alongside less developed areas in other parts of the country. In recent decades, regional connectivity initiatives such as theChina-Pakistan Economic Corridor (CPEC) have emerged as pivotal contributors to infrastructure and energy development, with long-term implications for economic stability. Pakistan was classified as a semi-industrial economy for the first time in the late 1990s, albeit anunderdeveloped country with a heavy dependence on agriculture, particularly the textile industry relying on cotton production. Primary export commodities include textiles, leather goods, sports equipment, chemicals, and carpets/rugs.

Pakistan is presently undergoing economic liberalization, including theprivatization of all government corporations, aimed at attracting foreign investment and reducing budget deficits. However, the country continues to grapple with challenges such as rapid population growth, widespread illiteracy, political instability, hostile neighbors, terrorism and heavy foreign debt.

As of 11 February 2026, the Governor of theState Bank of Pakistan stated that the economy was projected to grow between 3.75% and 4.75% in fiscal year 2026, exceeding a recent IMF forecast. The central bank kept its policy rate at 10.5% following earlier reductions, and projected the current account deficit to remain within 0–1% of GDP, while emphasizing the need for continued structural reforms to sustain growth.

Theeconomy of Afghanistan is listed as the124th largest in the world in terms of nominalgross domestic product (GDP), and102nd largest in the world in terms ofpurchasing power parity (PPP). With apopulation of around 40 million people,Afghanistan'sGDP (nominal) stands at $14.58 billion as of 2021, amounting to aGDP per capita of $363.7 (according to a World Bank report). Its annual exports is around $2 billion, withagricultural,mineral andtextile products accounting for 94% of total exports. The nation's totalexternal debt is currently about $1.4 billion.

The Afghan economy continues to improve due to the influx ofexpats, establishment of moretrade routes with neighboring and regional countries, and expansion of the nation's agriculture,transport,energy andmining sectors. The billions of dollars that came from expats and the international community saw this increase when there was more political stability.

Despite holding mineral deposits worth over $2.5 trillion, with huge amounts of copper, rare earths and minerals, Afghanistan remains as one of theleast developed countries in the world. Its unemployment rate is little over 13%, and around 48% of its population lives below thepoverty line. The reason for this has been the continuous war in the country, which deterred major infrastructure developments and foreign investments. The population of Afghanistan increased by more than 50% between 2001 and 2014, while its GDP grew eightfold. After the Islamic Emirate's return to power in 2021, theBiden administration decided to confiscate or withhold $9.5 billion worth of Afghanistan's assets to stop the Taliban from accessing it.

The officialcurrency of Afghanistan is theafghani (AFN), which has anexchange rate of around 65 afghanis to 1United States dollar. The country has acentral bank calledDa Afghanistan Bank. A number of otherbanks also operate in the country, including theAfghanistan International Bank,Azizi Bank,New Kabul Bank, andPashtany Bank.

Furthermore, the economy of Afghanistan is in a defunct state because of severe corruption by Afghan warlords and government PMs, since 2002 to 2021.Ashraf Ghani, the president from 2013 to the end of the Afghan republic, is said to be the worst leader of Afghanistan, since millions upon billions of dollars were wasted on the upper class of the nation; while the rest of the population suffered through severe malnutrition and hunger, creating severe inequality.

Theeconomy of Bhutan is based onagriculture andforestry, which provide the main livelihood for more than 60% of the population. Agriculture consists largely ofsubsistence farming andanimal husbandry. Rugged mountains dominate the terrain and make the building of roads and other infrastructure difficult.Bhutan is among the richest bygross domestic product (nominal) per capita in South Asia, at $3,491 as of 2022, but it still places 153rd, and among the poorest in the world. The totalgross domestic product is only $2.898 billion, and 178th according toIMF.

Bhutan's economy is closely aligned with India's through strong trade and monetary links and dependence on India's financial assistance. Most production in the industrial sector is of the cottage industry type. Most development projects, such as road construction, rely on Indianmigrant labour. Model education, social, and environment programmes are underway with support from multilateral development organisations.

Each economic programme takes into account the government's desire to protect the country's environment and cultural traditions. For example, the government, in its cautious expansion of the tourist sector, encourages visits by upscale, environmentally conscientious tourists. Detailed controls and uncertain policies in areas such as industrial licensing, trade, labour, and finance continue to hamper foreign investment.Hydropower exports to India have boosted Bhutan's overall growth, even though GDP fell in 2008 as a result of a slowdown in India, its predominant export market.

Since 1961, the government of Bhutan has guided the economy throughfive-year plans in order to promote economic development.^[140]

In the 1970s, the king placed importance onGross National Happiness (GNH) over gross domestic product (GDP).^[141][142]

On 8 December 2023, Bhutan graduated from theUN's list of least developed countries (LDCs), making it only the 7th country to do so and the first in 3 years.^[143][144]

In ancient times,Maldives were renowned forcowries,coir rope, driedtuna fish (Maldive fish),ambergris (maavaharu) andcoco de mer (tavakkaashi). Local and foreign trading ships used to load these products in the Maldives and bring them abroad.

Nowadays, themixed economy of Maldives is based on the principal activities oftourism,fishing andshipping. This results from the Maldives' strategic geographic positioning near crucial sea routes essential for China's energy provisions. Consequently, China has persistently utilised its economic resources to enhance its sway over the Maldivian government.

Tourism is the largest industry in the Maldives, accounting for 28% of GDP and more than 60% of the Maldives' foreign exchange receipts. It powered the current GDP per capita to expand 265% in the 1980s and a further 115% in the 1990s. Over 90% of government tax revenue flows in from import duties and tourism-related taxes.

Fishing is the second leading sector in the Maldives. The economic reform program by the government in 1989 lifted import quotas and opened some exports to the private sector. Subsequently, it has liberalised regulations to allow more foreign investment.

Agriculture and manufacturing play a minor role in the economy, constrained by the limited availability of cultivable land and shortage of domestic labour. Most staple foods are imported.

Industry in the Maldives consists mainly of garment production, boat building, and handicrafts. It accounts for around 18% of GDP. Maldivian authorities are concerned about the impact of erosion and possible global warming in the low-lying country.

Among the 1,190 islands in the Maldives, only 198 are inhabited. The population is scattered throughout the country, and the greatest concentration is on the capital island,Malé. Limitations onpotable water andarable land, plus the added difficulty of congestion are some of the problems faced by households inMalé.

Development of the infrastructure in the Maldives is mainly dependent on the tourism industry and its complementary tertiary sectors, transport, distribution, real estate, construction, and government. Taxes on the tourist industry have been plowed into infrastructure and it is used to improve technology in the agricultural sector.

Nepal’s economy is largely driven byagriculture,services,industry, andtourism.Agriculture remains the main source of livelihood for most of the population, while the service sector including trade, transport, and communications has become increasingly important. In recent years,hydropower , manufacturing, and information technology have shown growing potential, supported by government efforts to attract investment and improve infrastructure. The country continues to pursue policies aimed at sustainable growth and regional economic integration.

Themixed economy ofSri Lanka was valued at LKR 29.89 trillion (around $99 billion) in 2024 bygross domestic product (GDP) and $342.6 billion bypurchasing power parity (PPP)^[145]Sri Lanka's economy expanded by 5.0% in 2024,^[145][146] marking a strong recovery from the 2022 economic crisis.^[147]

Sri Lanka has met theMillennium Development Goal (MDG) target of halving extreme poverty and is on track to meet most of the other MDGs, outperforming otherSouth Asian countries. Sri Lanka's poverty headcount index was 4.1% by 2016. Since the end of the three-decade-longSri Lankan Civil War, Sri Lanka has begun focusing on long-term strategic and structural development challenges and has financed several infrastructure projects.

Following a sovereign debt default in 2022 amid unsustainable external obligations and severe macroeconomic imbalances, Sri Lanka’s economy experienced one of the deepest contractions in its history, with real GDP shrinking sharply and poverty rising significantly. Reforms under a multi-year International Monetary Fund (IMF) Extended Fund Facility (EFF) program initiated in March 2023 have helped stabilize key macroeconomic indicators — inflation has eased from crisis-era highs into low single digits, foreign exchange reserves have rebuilt to levels supporting multiple months of imports, and fiscal balances have improved with a return to primary surpluses. The economy rebounded with approximately 5 % growth in 2024 and continued expansion into 2025, though growth is expected to moderate in 2026.^[148]