SME Futures Editorial
India’s industrial output growth accelerated to 5 per cent in January 2025, driven by a solid rebound in the manufacturing sector, according to the latest data released by the National Statistical Office (NSO) on Wednesday. This marks an improvement over December 2024’s revised growth of 3.5 per cent, which was earlier estimated at 3.2 per cent.
The Index of Industrial Production (IIP) stood at 5 per cent in November 2024 as well, indicating a return to stable growth momentum. In comparison, factory output expanded by 4.2 per cent in January 2024.
Manufacturing leads the charge
The manufacturing sector, which holds the largest weight in the IIP, reported a 5.5 per cent growth in January 2025, significantly higher than the 3.6 per cent recorded in the same month last year. This robust performance has helped offset a slowdown in mining and power output.
- Mining production increased by 4.4 per cent, down from 6 per cent in January 2024.
- Electricity generation growth slowed sharply to 2.4 per cent, compared to 5.6 per cent a year earlier.
As per use-based classification, capital goods output surged by 7.8 per cent in January 2025, up from 3.2 per cent a year ago. This indicates stronger investment activity and capacity-building efforts, according to Acuité Ratings & Research.
Consumer durables, often seen as a proxy for discretionary spending, grew 7.2 per cent, while consumer non-durables saw a marginal contraction of 0.2 per cent, compared to a 0.3 per cent growth in January 2024.
Other notable highlights from January 2025 include:
- Infrastructure/construction goods output increased by 7 per cent, up from 5.5 per cent in January 2024.
- Primary goods output rose 5.5 per cent, from 2.9 per cent a year earlier.
- Intermediate goods saw a 5.2 per cent growth, slightly lower than 5.3 per cent in January 2024.
Commenting on the latest IIP data, Acuité Ratings & Research noted, “India’s industrial output posted a stronger-than-expected growth of 5.0 per cent in January, up from 3.5 per cent in December 2024, reflecting a good pick-up in industrial activity, driven primarily by the manufacturing sector’s solid 5.5 per cent expansion as well as an uptick in the mining output.”
However, the agency flagged the moderation in electricity generation, adding, “Electricity moderated from 6.2 per cent to 2.4 per cent, and we expect that the onset of the summer season will bring about a significant surge in demand, helping the overall index in the coming months.”
On the investment front, Acuité highlighted the 7.8 per cent growth in capital goods as an encouraging sign, “It points to stronger investment activity and a potential ramp-up in capacity-building efforts.”
The steady growth of 7 per cent in infrastructure and construction goods was attributed to increased public infrastructure spending, while consumer durables demand got a lift from the wedding season.
Acuité cautioned that the private capex recovery remains tentative and emphasized the need for the government to frontload spending in FY26 to sustain growth momentum.
“The Budget’s consumption push and a normal monsoon could further help demand and industrial recovery. Encouragingly, consumer and public spending are showing signs of improvement,” the agency added. “For now, we keep our FY25 IIP forecast pegged at 4.5 per cent.”
In the April-January 2024-25 period, the IIP grew 4.2 per cent, slower than the 6 per cent recorded during the same period in the previous financial year.
