Industrial production rises to eight-month high of 5% in January

Industrial production for January

India’s industrial production rose to an eight-month high of 5 percent in January, up from 3.5 percent in the previous month, as manufacturing and mining supported growth, according to data released by the government on March 12 shows.

"IIP growth improved to a higher than expected 5 percent in January 2025, led by manufacturing and mining. The use-based data is less enthusing, with a sequential YoY pickup seen in only two segments (consumer non-durables and primary goods) amidst a slowdown in the other four," said Aditi Nayar, chief economist, Icra.

The number was above the Moneycontrol poll forecast of 3.5 percent, and even higher than the higher than the upper end of the forecast range of 3 to 4.4 percent.

Of the three major industries tracked by the index of industrial production, electricity was the only sector which witnessed a moderation in growth to 2.4 percent from 6.2 percent earlier. Manufacturing, which accounts for nearly two-thirds of the index rose to 5.5 percent from 3.4 percent earlier, while mining expanded 4.4 percent compared with 2.7 percent in the previous month.

January also led to a pick up in growth for the fiscal, as average growth for the first ten months rose to 4.2 percent.

In the third quarter industrial growth rose to 4 percent from  2.7 percent in the previous quarter.

A better number was also reflected in the growth in capital and infrastructure goods, which despite an easing in February expanded over 7 percent for the month. Consumer durables also recorded a 7.2 percent growth in the month, but eased from 8.3 percent in the previous month. Consumer non-durables continued to contract for the second consecutive month, even as the pace of contraction eased.

"A sustained and broad-based improvement in consumption remains critical, especially given the context of trailing urban demand. The latest inflation print has shown a significant moderation to 3.6 percent in February from 4.3 percent in January," said Rajani Sinha, chief economist, CareEdge.

Despite a better January, India’s manufacturing growth is likely to disappoint in FY25, with second advance estimates pegging growth at 4.3 percent against 12.3 percent in the previous year.

India’s manufacturing sector recorded a 3.5 percent growth in the third quarter, as the economy grew 6.2 percent.