India's industrial output experienced a moderate acceleration in March 2025, with growth edging up to 3% compared to a revised 2.7% in February, according to data released by the Ministry of Statistics and Programme Implementation. While this indicates a slight recovery from a six-month low recorded in the previous month, the growth rate remains below the 5.5% expansion seen in March of the previous year.
The Index of Industrial Production (IIP) stood at 164.8 in March 2025, a notable increase from 160.0 in March 2024. However, the overall industrial growth for the financial year 2024-25 was 4%, a slowdown from the 5.9% recorded in the preceding financial year. This also represents the lowest growth rate in the last four years.
A sector-wise analysis reveals that manufacturing, which holds the largest weight in the IIP, grew by 3% in March 2025, a marginal increase from 2.9% in February. Electricity generation saw a more substantial expansion of 6.3%, compared to 3.6% in the previous month. Mining activity, however, experienced a slowdown, with growth decreasing to 0.4% from 1.6% in February. Within the manufacturing sector, 13 out of 23 industry groups at the NIC 2-digit level demonstrated positive growth in March 2025 compared to the same period last year. The top three sectors contributing positively to this growth were "Manufacture of basic metals" (6.9%), "Manufacture of motor vehicles, trailers, and semi-trailers" (10.3%), and "Manufacture of electrical equipment" (15.7%).
In terms of use-based classification, infrastructure/construction goods led the way with an 8.8% increase, followed by consumer durables at 6.6% and primary goods at 3.1%. However, consumer non-durables experienced a contraction of 4.7% during the month.
Several economists have weighed in on the recent IIP figures. Some experts point out that the March data fell slightly short of their projections, attributing the difference to a potentially lower response rate due to the early release of the data. This might lead to a larger-than-usual revision in subsequent releases. Concerns have also been raised about the subdued nature of India's industrial growth this year, with consumer demand playing a significant role in shaping the economic landscape. Looking ahead, it is believed that industrial growth in the fiscal year 2025-26 will be fueled by a recovery in private investment and a boost in consumption. However, the evolving tariff environment in the United States could potentially impact the performance of manufactured goods exports.
