India maintains resilience amid trade uncertainties; tax reforms to aid growth: Finance ministry

NEW DELHI: A recent report by the Finance Ministry's emphasises that government reforms will protect the economy from trade-related challenges, while advocating for continued vigilance against external risks and market fluctuations.

The Monthly Economic Review highlights GST rationalisation as a crucial component of tax reforms, alongside corporate and personal income tax adjustments. The ministry suggests these rate modifications will contribute to reduced inflation and enhanced growth potential, as reported by ANI.


India's sovereign credit ratings have received upgrades from three global agencies in FY26, reflecting robust growth, economic stability and fiscal management in recent years.

The newly introduced US H-1B visa fee of $100,000 has created disruptions, necessitating careful observation of its effects on remittances and service trade balances should these restrictions continue. "This is not the time to drop our guard. Uncertainties and risks persist," stated the report.

Further mentioning the government's plan it added, "The Union government's reform agenda is expected to cushion the economy against the adverse effects of trade disruptions. Regulatory reform and infrastructure development will be key to sustaining momentum."

The ministry also emphasised swift decision-making across governmental levels and adherence to fiscal targets to ensure affordable capital access for all societal segments.

Persistent tariff uncertainties could affect exports, impacting domestic employment and consumption. Developing alternative markets requires time to match established market contributions.

The US H1B visa fee implementation indicates potential risks to the services sector from trade uncertainties. "For now, the risks appear manageable, but they are there," mentioned the report.

"The near-term outlook, therefore, is characterised by steady, reform-driven growth rooted in macroeconomic discipline and adaptive economic diplomacy, with ongoing vigilance warranted against external shocks and global market volatility," the ministry noted.

India maintains external sector resilience despite trade challenges, with positive economic prospects amid global uncertainties. Domestic demand remains a key growth driver.

The economy expanded by 7.8 per cent in April-June, surpassing RBI's 6.5 per cent projection. RBI forecasts FY26 growth at 6.5 per cent, while the Economic Survey projected 6.3-6.8 per cent.

The report indicated that GST rationalisation aims to reduce consumer tax burden, enhance consumption, and offset tariff impacts whilst potentially lowering inflation.

Effective September 22, GST comprises two primary rates of 5 and 18 per cent, with a 40 per cent rate for ultra-luxury items, replacing the previous four-tier structure of 5, 12, 18 and 28 per cent, plus compensation cess.