Industrial production slows, IIP at 6-month low of 2.9% in March 2025

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| Photo Credit: Reuters

The Index of Industrial Production (IIP) grew at its slowest rate in six months, clocking a pace of 2.9% in March 2025, dragged down by decelerating growth across all sectors, according to data from the Ministry of Statistics and Programme Implementation. The IIP’s growth rate came in much lower than the 4% estimated by Reuters. 

“A combination of high base effects along with a slowing growth in mining and manufacturing sectors led to the growth falling in February 2025,” said Paras Jasrai, associate director at India Ratings and Research.

Mining sector growth slowed to 1.6% in February 2025, as against 8.1% in the same month of the previous year. The manufacturing sector grew at a pace of 2.9%, as against 4.9% in the year ago period. Electricity production dipped to 3.6% this February, from 7.6% a year ago.

Only capital goods growth

According to use-based classification, barring capital goods, all goods categories registered a slower output growth in February 2025, compared to the same month last year. Capital goods output, on the other hand, grew the fastest at 8.2%, as against 1.7% in the corresponding period last year.  Intermediate goods output grew the slowest at 1.5% and consumer non-durables continued to decline, albeit at a slower pace, with output declining 2.1%, a slower slip in comparison to 3.2% in the year ago period.

“Worryingly, the output growth of all the sub-sectors at the use-based level declined in February 2025 compared to the previous month, after a gap of five months. This indicates the muted and volatile nature of industrial output growth,” Mr. Jasrai said.

“Deceleration in IP growth in February was driven by manufacturing, while higher power demand cushioned the slowdown to an extent. Capital and infrastructure goods output growth remains elevated. IP growth in March likely accelerated, supported by inventory build-up ahead of the U.S. tariff announcements,” said Aastha Gudwani, India Chief Economist at Barclays.