India’s industrial output growth slows to six-month low of 2.9% in February 2025

  • The slowdown in industrial activity highlights domestic challenges amid heightened global uncertainties, including geopolitical conflicts and rising trade tensions, experts said

Rhik Kundu
Published11 Apr 2025, 04:31 PM IST
India's industrial output growth slowed down to 2.9 per cent in February 2025, driven by weak manufacturing and mining output. The previous low, recorded in August last year, was zero. (Image: Pixabay)
India’s industrial output growth slowed down to 2.9 per cent in February 2025, driven by weak manufacturing and mining output. The previous low, recorded in August last year, was zero. (Image: Pixabay)

New Delhi: India’s industrial production slowed to a six-month low of 2.9% in February 2025, driven by weak manufacturing and mining output, according to latest government data released on Friday. The previous low, recorded in August last year, was zero.

Alongside, January’s growth was revised upwards, to 5.2% from 5%, showed data released by the ministry of statistics and programme implementation (MoSPI).

Experts said the slowdown was expected. “The manufacturing sector, which holds the lion’s share of the IIP weight, expanded by 2.9%, its lowest level since last August, showing subdued rural and semi-urban consumption trends," said Sankar Chakraborti, managing director & CEO at Acuité Ratings & Research Limited.

“While we are seeing the industrial sector post uneven numbers, this volatility flags the risk of plateauing momentum. The divergence between investment and consumption needs close monitoring in the run-up to FY26,” he added.

“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,” said Paras Jasrai, associate director at India Ratings and Research. “This indicates the muted and volatile nature of industrial output growth.”

Use-based categories refer to the classification of goods by their end use—such as consumer or intermediate goods—offering insights into the economy.

Category-wise numbers

Growth in output from manufacturing, which has the highest weight of 77.6% in the IIP among sectors, fell to 2.9% in February, compared to 5.8% in January, according to the latest data.

Also read | India can leap from cost competitiveness to innovation-led manufacturing

Growth in the other two sectors comprising the index—electricity generation (weight: 7.9%) and mining activity (weight: 14.4%)—also slowed to 3.6% and 1.6% in February, respectively, from 4.4% and 5.6% in January.

Meanwhile, among use-based categories, consumer durable output growth fell to a 15-month low of 3.8% annually in February 2025, while the consumer non-durable output declined sharply by 2.1% in February 2025 for the third straight month.

However, the decent growth in capital and infrastructure goods at 8.2% and 6.6% annually, respectively, in February 2025 suggests sustained and moderated growth in investment demand and construction sector output.

Meanwhile, primary and intermediate goods reported 2.8% and 1.5% annual growth in February, lower than the 5.5% and 5.3% annual growth registered respectively in the previous month, potentially indicating lower demand amid slowing economic growth.

Primary goods are raw materials from natural sources like minerals, fuels, and electricity, while intermediate goods are partially processed inputs—such as yarns, chemicals, and semi-finished steel—used in further production.

March looking good

“While the growth performance of mining is expected to deteriorate in March 2025 relative to February 2025, this is likely to be offset by an uptick in electricity generation, amid steady manufacturing growth,” said Aditi Nayar, chief economist and head of research & outreach at rating agency Icra Ltd.

“Icra expects the IIP growth to print at about 3% in March 2025, similar to the levels seen in February 2025,” she added.

Tough times

The slowdown in industrial activity highlights domestic challenges amid heightened global uncertainties, including geopolitical conflicts and rising trade tensions, experts said.

At the same time, global trade tensions, stoked by US import tariffs, are clouding the manufacturing outlook and threatening broader economic growth.

Earlier this week, India's central bank, the Reserve Bank of India (RBI) cut its growth forecast for the current year by 20 basis points to 6.5%, stating that growth could fall even further amid the global turmoil.

GDP growth in the December quarter (Q3, FY25) stood at 6.2%, rebounding from a near two-year low in the previous quarter (5.6%), leaving much to be done in the final quarter of FY25 to achieve the full-year revised growth target of 6.5% put out by the National Statistical Office (NSO).

Also read | India’s GDP growth likely improved to 6.3% in December quarter: Mint poll

To meet the NSO revised full-year growth projection, the Indian economy needs to expand by a steep 7.6% in the January–March quarter—an ambitious target amid lingering global uncertainties and subdued domestic demand.

Meanwhile, India’s real GDP growth forecast for FY26 has been lowered to 6.5% from the earlier projection of 6.7%, by the RBI during the central bank’s policy review earlier this week.

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Business NewsEconomyIndia’s industrial output growth slows to six-month low of 2.9% in February 2025
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First Published:11 Apr 2025, 04:31 PM IST
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