India’s Industrial Output Growth Slows to 2.7% in April 2025, Capital Goods Shine Amid Sectoral Weakness

India’s industrial production growth slowed to 2.7% year-on-year in April 2025, marking the weakest pace of expansion in eight months, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Wednesday. The moderation comes after a revised 3.9% growth in March and a robust 5.2% recorded in April last year.

India’s industrial production growth stood at 2.7 per cent in April. (Reuters) | Financial Express

The Index of Industrial Production (IIP), a key gauge of industrial activity, rose to 152.0 in April 2025 from 148.0 in April 2024. While the overall momentum has softened, certain segments of the economy continue to show encouraging trends.

Sectoral Performance: Mixed Signals

The industrial sector’s performance was uneven across categories:

• Manufacturing: The manufacturing segment, which holds the largest weight in the IIP, grew by 3.4% in April, providing a silver lining to the otherwise subdued industrial landscape. Notably, strong growth was seen in the production of machinery and equipment (up 17%), motor vehicles (15.4%), and basic metals (4.9%).

• Electricity: Electricity generation increased by 1.1% year-on-year, continuing its positive trend, albeit at a slower pace.

• Mining: The mining sector saw a contraction of 0.2%, a sharp reversal from its 6.8% growth in the previous month, likely impacted by adverse weather conditions and base effects.

Use-Based Classification: Capital Goods Surge

An analysis based on the use of goods indicates diverging trends in consumption and investment:

• Capital Goods: One of the standout segments, capital goods production, surged by 20.3% year-on-year, reflecting strong investment activity and business confidence. This growth suggests that firms are ramping up capacity in anticipation of future demand.

• Consumer Durables: The output of consumer durable goods rose by 6.4%, signaling resilient urban demand supported by festive and wedding season spending.

• Consumer Non-Durables: In contrast, output in the consumer non-durables segment—typically tied to rural demand—contracted by 1.7%. This signals ongoing weakness in consumption from rural and semi-urban markets.

• Infrastructure/Construction Goods: This segment grew moderately at 3.3%, indicating a continued push in infrastructure spending.

Economic Context and Outlook

Several factors contributed to the April slowdown, including:

• An unfavorable base effect from high growth in the same month last year.

• Weather-related disruptions due to unseasonal rains, particularly affecting mining.

• Global headwinds and export sluggishness weighing on manufacturing demand.

• Continued rural distress as evidenced by weak consumer non-durables performance.

Despite the deceleration, analysts see a silver lining in the robust capital goods growth and resilient manufacturing. “The spike in capital goods is a positive signal for investment-led growth. However, the softness in rural demand and electricity generation will need monitoring,” said a senior economist at a leading brokerage.

Looking ahead, the upcoming GDP data for Q4 FY 2024-25 (January-March) scheduled for release on May 30, 2025, is expected to offer a more comprehensive view of India’s economic trajectory.

India's industrial performance remains vulnerable to both domestic consumption trends and global economic conditions. While infrastructure and manufacturing show strength, the overall pace of recovery remains uneven.

(Sources: Financial Express, Live Mint, Times Of India)