New Delhi: The upcoming Goods and Services Tax (GST) reforms, aimed at reducing rates and boosting private consumption, could help offset the impact of fresh US tariffs, BMI, a Fitch Solutions company, said on Thursday. The firm added that India is set to remain one of Asia’s fastest-growing emerging market economies through this decade.

India’s GDP is expected to remain above 6 per cent despite tariff pressures on some industries, according to BMI’s note.

“We forecast India’s economic growth to steadily slow to just above 6.0 per cent by the decade’s end, slightly below the 2010–2019 pre-pandemic average of 6.5 per cent, yet still positioning India among Asia’s fastest-growing economies,” the report said.

Productivity growth is projected at around 5 per cent over the coming decade, providing momentum to GDP, it added.

BMI noted that a 25-percentage point increase in reciprocal tariffs could slow real GDP growth in FY2025/26 and FY2026/27 by 0.2 per cent. As a result, forecasts have 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 cancel out the drag on growth from the tariffs. Given that details have yet to be confirmed, we highlight the GST reform as a slight upside risk to our growth forecast for now.”

The planned GST slab rationalisation is expected to drive consumption and improve profitability in key sectors, including automobiles, financial services, cement, and consumer staples.

An SBI Research report recently estimated that GST reforms, combined with income tax cuts, could lift consumption by ₹5.31 lakh crore, or around 1.6 per cent of GDP.

Meanwhile, Fitch Ratings has affirmed India’s rating at ‘BBB’ with a stable outlook and expects US tariffs to have only a limited effect on growth.

IANS