New Delhi India’s industrial sector witnessed another month of sluggish growth, with industrial production expanding by just 1.2% year-on-year in May 2025, according to the latest data released by the Ministry of Statistics and Programme Implementation (MoSPI). This marks a continued slowdown from April’s revised figure of 1.8% and raises fresh concerns about the country’s manufacturing momentum amid global uncertainties and domestic challenges.https://www.business-standard.com/
Weak Performance Across Key Sectors
The Index of Industrial Production (IIP), which measures factory output across mining, manufacturing, and electricity sectors, indicated that manufacturing — which accounts for over three-fourths of the index — remained under stress.
- Manufacturing output grew marginally by 0.9% in May, down from 1.5% in April 2025.
- Mining activity fared slightly better with a 2.4% growth rate, supported by moderate expansion in coal and mineral production.
- Electricity generation, often a bellwether for industrial activity, increased by just 1.7% compared to 3.4% in the previous month.
Persistent Challenges Weighing on Growth
Experts attribute the weaker-than-expected IIP figures to a combination of factors, including:
- Muted consumer demand, particularly for non-essential and durable goods.
- Persisting global supply chain disruptions, which continue to affect raw material availability and costs.
- High borrowing costs as the Reserve Bank of India (RBI) maintains tight monetary policy to keep inflation in check.
“India’s industrial sector is feeling the pinch of high input costs and weak external demand. While there are pockets of resilience in sectors like mining and capital goods, overall momentum remains tepid,” said Rajiv Sinha, an economist at India Economic Forum.
Consumer Goods Remain Under Pressure
A closer look at the use-based classification shows that consumer durables output contracted by 2.5%, reflecting cautious spending by households. Consumer non-durables, which include essential items like food products, grew by just 0.6%. Meanwhile, capital goods — a proxy for investment activity — rose by a modest 1.3%, suggesting that private investment remains sluggish.
What Lies Ahead?
Industry leaders are urging the government to introduce targeted policy measures to revive domestic demand and improve industrial sentiment. Steps such as incentivising MSMEs, enhancing logistics efficiency, and ensuring smoother credit flow could help bolster output in the coming months.
Additionally, the monsoon’s progress and its impact on rural demand will be closely watched, as a good harvest can boost consumption in the second half of the fiscal year.
Despite the disappointing May numbers, some analysts believe that India’s industrial production could see a gradual uptick in the latter part of FY 2025-26, provided global headwinds ease and domestic reforms continue to gain pace.
Key Takeaway
India’s industrial production growth slowing to 1.2% in May 2025 underscores the challenges the economy faces in maintaining robust manufacturing and industrial output. With global and domestic factors at play, policymakers and industry stakeholders will need to work in tandem to strengthen the sector and support the broader economic recovery.
