New Delhi, Aug 28 (IANS) – Planned Goods and Services Tax (GST) reforms aimed at lowering tax rates and boosting private consumption could help counter the impact of US tariffs, according to BMI, a Fitch Solutions company. Despite potential external pressures, India is projected to remain one of Asia’s fastest-growing emerging market economies throughout this decade.
BMI expects India’s GDP growth to remain above 6 per cent, even with additional US tariffs affecting certain sectors.
“We forecast India’s economic growth to gradually ease to just over 6.0 per cent by the decade’s end, slightly below the pre-pandemic (2010–2019) average of 6.5 per cent, yet still placing India among Asia’s top-performing economies,” BMI noted.
The report highlighted that productivity is expected to rise around 5 per cent annually over the coming decade, providing significant support to GDP growth.
BMI’s earlier estimates suggested that a 25-percentage-point increase in “reciprocal” tariffs could slow real GDP growth in FY2025/26 and FY2026/27 by about 0.2 percentage points. Forecasts have since been revised to 5.8 per cent for FY2025/26 and 5.4 per cent for FY2026/27.
On GST reforms, BMI said: “Depending on the specifics, the GST reform could offset the drag on growth from tariffs. As the details are yet to be finalised, we currently see GST reforms as a slight upside risk to our growth projections.”
The upcoming rationalisation of GST into a two-slab structure is expected to drive consumption and improve margins in sectors like automobiles, financial services, cement, and consumer staples.
An SBI Research report recently estimated that GST reforms, coupled with recent income tax cuts, could boost consumption by Rs 5.31 lakh crore—equivalent to about 1.6 per cent of GDP.
Separately, Fitch Ratings has affirmed India’s sovereign rating at ‘BBB’ with a stable outlook and anticipates that US tariffs will have only a limited impact on growth.
