April Sees Industrial Production Decelerate to an Eight-Month Low
Industrial Output Growth in India Slows to 2.7% in April 2025
In April 2025, India’s industrial output growth experienced a notable slowdown, reaching just 2.7%, marking the lowest rate in eight months. This decline was attributed to weakening performance in the manufacturing, mining, and electricity sectors. While capital goods saw a substantial increase of 20.3%, the mining sector faced a slight contraction of 0.2%. Analysts have pointed to unseasonal rainfall, base effects, and global economic uncertainty as significant factors contributing to this decline.
Despite the overall slowdown, certain manufacturing sectors saw positive growth. Notably, production in the computer and electronics sector increased by 10.5%, electrical equipment by 15.2%, machinery by 17%, motor vehicles by 15.4%, and metal products by 12.7%. The industrial output growth dropped sharply from an upwardly revised 3.9% in March and 5.2% in the same month last year, with all three sectors comprising the Index of Industrial Production (IIP) facing reductions. This reduction marks the lowest growth rate since August of the previous year, which had recorded flat growth.
For context, in February, the IIP growth was slightly higher than April’s at 2.71%. The manufacturing sector, which holds a weight of 77.6% in the index, registered a modest growth of 3.4% in April compared to 4% in March. Electricity production, which accounts for 7.9% of the IIP, increased by only 1.1% in April, a significant drop from the 7.5% recorded in March. Conversely, the mining sector, holding a weight of 14.3% in the index, contracted by 0.2% in April after a growth of 1.2% in March.
Within the manufacturing domain, the production of coke and refined petroleum products decreased by 2.1%, while chemicals and pharmaceuticals saw declines of 3.6% and 3.9%, respectively. Nevertheless, it is noteworthy that the number of sectors exhibiting positive growth in April reached a three-month high of 16, compared to 19 in January. However, these sectors collectively represented only 49.7% of the manufacturing index’s weight. Notably, just 11 of 23 sub-sectors experienced a year-on-year growth that surpassed the overall output growth for April 2025, indicating a skew in industrial performance.
According to use-based classifications, the capital goods sector demonstrated the strongest performance with a growth rate of 20.3% in April, up from 3.6% in March, signaling robust investment demand. Intermediate goods experienced a growth rate of 4.1% in April, an increase from 3.8% in March. Infrastructure and construction goods, which have consistently outperformed other sectors, recorded a growth of 4.0% in April, compared to a significant 9.9% in March. The consumer durables sector saw a decline in growth, dropping to 6.4% from 6.9%, while the sector overall reported a contraction of 1.7%, improving slightly from a previous decline of 4.0%. The primary goods sector, the largest by weight, decreased by 0.4% during the month after growing 3.9% in March.
Economist Paras Jasrai commented on the situation, suggesting that unseasonal rains might also negatively affect output in construction goods. Coupled with an unfavorable base effect from May 2024’s 6.3% year-on-year growth, it is anticipated that factory output growth will remain below 2% year-on-year in May 2025. Rajani Sinha, chief economist at CareEdge Ratings, remarked on the ongoing global economic uncertainty, even though the US placed reciprocal tariffs on a 90-day hold. She noted that this situation is likely to dampen private investment and consumer spending hurdles. However, there are expectations for further rate cuts by the RBI, amid easing price pressures, which may provide some support to the economy.
