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India likely to remain one of Asia’s fastest-growing emerging market economies this decade, even as fresh US tariffs weigh on some industries, as per BMI, a Fitch Solutions firm.
Despite the expected moderation, India’s GDP growth is projected to stay above 6 per cent in the coming years.
India is likely to remain one of Asia’s fastest-growing emerging market economies this decade, even as fresh US tariffs weigh on some industries, according to BMI, a Fitch Solutions company. The research firm said upcoming goods and services tax (GST) reforms, aimed at cutting rates and boosting private consumption, could help offset the tariff impact.
“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,” BMI noted.
Despite the expected moderation, GDP growth is projected to stay above 6 per cent in the coming years. Productivity is also estimated to rise around 5 per cent through the decade, providing strong momentum.
BMI said earlier that a “25-percentage point increase in the ‘reciprocal’ tariff would slow real GDP growth in FY2025/26 (April-March) and FY2026/27 by a further 0.2 per cent”. It has now trimmed its projections, expecting the economy to expand 5.8 per cent in FY2025/26 and 5.4 per cent in FY2026/27.
On the GST reforms, the firm added that “depending on the specifics, the GST reform could cancel out the drag on growth from the tariffs. Given that the 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 into a simpler two-slab structure is expected to spur consumption and improve margins across sectors including automobiles, cement, consumer staples and financial services.
Backing the outlook, SBI Research recently said GST reforms, along with recent income tax cuts, could add Rs 5.31 lakh crore to consumption, equivalent to 1.6 per cent of GDP. Meanwhile, Fitch Ratings affirmed India’s sovereign rating at ‘BBB’ with a stable outlook, saying US tariffs are likely to have only a limited impact on growth.
Meanwhile, according to the August edition of EY’s Economy Watch Report, India could emerge as the world’s second-largest economy by 2038 with a gross domestic product (GDP) of $34.2 trillion in purchasing power parity (PPP) terms. The consultancy highlighted that India’s growth story is supported not just by favourable demographics but also by structural reforms and resilient economic fundamentals.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h… Read More
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