Industrial output growth slips to 4-year low of 4% in FY25

Manufacturing, which has the highest weight in the Index of Industrial Production (IIP), posted a sluggish 3.9% expansion in the fiscal year ending March 2025, lower than 5.5% growth recorded in the previous year.

New Delhi: India’s industrial production growth slipped to a four-year low of 4 per cent in the financial year 2024-25 from 5.9 per cent recorded in the previous year, dragged by poor performance of manufacturing and mining sectors, official data showed on Monday.

Manufacturing, which has the highest weight in the Index of Industrial Production (IIP), posted a sluggish 3.9 per cent expansion in the fiscal year ending March 2025, lower than 5.5 pef cent growth recorded in the previous year.

Mining output growth slumped from 7.5 per cent in 2023-24 to 2.9 per cent in 2024-25. Electricity production growth declined from 7.1per cent in 2023-24 to 5.1per cent in the year ended March 2025, as per data released by the Ministry of Statistics & Programme Implementation.

The overall industrial production growth in the financial year ended March 2025 was the slowest since Covid pandemic impacted 2020-21.  

On a sequential basis the IIP growth improved marginally to 3 per cent in March from a six-month low of 2.7 per cent recorded in February. The statistics department has revised down IIP growth for February to 2.7 per cent from initially-released 2.9 per cent.

Infrastructure and construction goods led the recovery (8.8 per cent IIP growth in March vs 6.8 per cent previous month), indicating government capex catching up towards the end of fiscal 2025, said Dharmakirti Joshi, Chief Economist, Crisil.

The new-age exports segments, computers and electronic products, saw a growth surge from 11.2 per cent in February to 21.5 per cent in March.

“Export-oriented sectors such as textiles, machinery and petroleum products saw growth improve, which could be due to frontloading of shipments ahead of reciprocal tariffs kicking in,” said Joshi.

At the use-based level, sequential output growth in March was led by consumer durable and infrastructure goods.

“The usual rush to meet capex targets both by state and union government helped the infrastructure goods segment register a robust growth,” said Paras Jasrai, Associate Director at India Ratings and Research.

The onset of the summer season along with excess heatwaves propelled the consumer durables output growth to recover to 6.6 per cent in March from a 15-month low of 3.7 per cent in February, Jasrai said.

"Looking ahead, while there is some evidence as well as commentary around frontloading in exports to the US, we need to see whether this is driven by redirection away from other geographies or a bump up in output in the ongoing month," said Aditi Nayar, Chief Economist at ICRA.

The industrial output growth in the January-March quarter slipped to 3.6 per cent year-on-year from 4.1per cent recorded in the previous quarter.

Based on advanced estimates for FY25 and first three quarter GVA numbers, the derived industrial GVA growth in 4Q FY25 stands at 5.6 per cent year-on-year. However, as per the latest production, it is unlikely to be so, in fact it could be around 4 per cent due to subdued growth in the manufacturing sector, Jasrai said.

Ind-Ra expects the industrial sector output growth to be around 3.5 per cent in April 2025, he added.