India’s October industrial growth at 14-month low of 0.4%

NEW DELHI: India’s industrial production grew 0.4% year-on-year in October, its slowest pace of expansion in 14 months, as manufacturing decelerated, and mining and electricity output contracted, provisional data released by the Ministry of Statistics and Programme Implementation (MoSPI) showed on Monday.

October's industrial output was lower than the 3.7% expansion recorded in the year-ago period. In September, India’s industrial production rose 4% annually, according to MoSPI’s revised estimates for the month (up from 3.2%). The October industrial output growth is the slowest since August 2024 when no increase was witnessed in the Index of Industrial Production (IIP).

The latest reading reflects a fragile, uneven rebound in industrial activity amid soft domestic demand, global uncertainty, and sector-specific challenges.

Industrial performance has remained volatile this fiscal year, slowing in the first quarter (April-June) before picking up pace from July. India’s core infrastructure sector, which accounts for over two-fifths of industrial output, posted zero growth in October, with production flat year-on-year, provisional commerce ministry data released earlier this month showed.

“The reasoning of less working days and less workers on ground is correct to some extent,” said N.R. Bhanumurthy, director at Madras School of Economics, adding that as IIP covers volume of production, a reduced number of working days due to festivals must have led to slower growth.

Manufacturing, which accounts for nearly 78% of the IIP, grew 1.8% year-on-year in October, down from 5.6% in September and 4.4% (revised) a year earlier.

Mining output shrank 1.8% year-on-year in October, compared with a 0.4% contraction in September, and a modest 0.9% rise in October 2024. Electricity generation also contracted 6.9% in October against a 3.1% growth in September and a 2% rise in the same month last year.

Madan Sabnavis, chief economist at Bank of Baroda, said: "IIP growth numbers do send mixed signals coming as it does against the background of the GST 2.0 which did reveal a pick-up in consumption of consumer goods."

He added that the growth numbers have been impacted by delayed withdrawal of rains, affecting both mining and power along with the fewer working days in October and drawdown of inventories.

Across use-based categories, capital goods, intermediate goods, infrastructure/construction goods, and consumer durables posted sequential growth, while both primary goods and consumer non-durables contracted during the month.

Capital goods production rose 2.4% in October, down from a 5.4% expansion in the previous month, according to the provisional data.

Intermediate goods output rose 0.9% annually in October, compared to a 6.3% increase the previous month. Infrastructure/construction goods output rose 7.9% annually in October, compared with a 10.6% growth in September.

Production of consumer durable goods fell 0.5% annually in October compared to a 10% rise in the previous month. Meanwhile, primary goods production reported a 0.6% contraction in October, compared to a 1.3% rise in September.

During October, production of consumer non-durables contracted by 4.4% annually, compared with a 0.3% contraction reported in the previous month.

"Q3 will be a critical period for industry as the full impact of GST as well as lower tax rates on income announced in February should ideally boost spending," Sabnavis said.

The industrial growth data for October comes days after India reported a GDP growth rate of 8.2% in July-September (Q2), the highest in six quarters. It was higher than the estimates of around 7%. The economy had expanded by 5.6% in the same quarter a year ago, and by 7.8% in the April-June period of this year.

Economists have upgraded growth forecasts for India for the ongoing fiscal year, from around 6.3-6.8% to above 7%. The Reserve Bank of India is also expected to revise its growth projection upwards at its monetary policy committee meeting later this week.