Dip in manufacturing dragged industrial growth based on Index of Industrial Production to 2.9 per cent in February as against 5.2 per cent of January 2025, government data released on Friday showed. This is the lowest in six months. Experts see the trend persisting in March as well.

Data released by the National Statistics Office (NSO) showed that the manufacturing sector’s output growth slowed to 2.9 per cent in February 2025, down from 4.9 per cent in the year-ago month.

Mining production growth dipped to 1.6 per cent from 8.1 per cent a year ago. Power output growth too slowed to 3.6 per cent in February from 7.6 per cent in the year-ago period.

April-Feb IIP grows

In April-February FY25, the IIP grew 4.1 per cent, down from 6 per cent recorded in the corresponding period of the preceding fiscal.

As per use-based classification, the capital goods segment growth accelerated to 8.2 per cent in February against 1.7 per cent in the year-ago period. Consumer durables (or white goods production) grew 3.8 per cent during the reporting month against a growth of 12.6 per cent in February 2024. In February 2025, consumer non-durables output contracted 2.1 per cent compared to a decline of 3.2 per cent a year ago.

Aditi Nayar, Chief Economist with ICRA, said as expected, the leap year base pulled down the YoY (year-on-year) growth of the IIP to 2.9 per cent in February 2025 from 5.2 per cent in January 2025. “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,” she said.

March outlook

Aastha Gudwani, India Chief Economist at Barclays, said in March, manufacturing IP is likely to show sequential acceleration, amid fiscal year-end seasonality and the likely push to production in select sectors ahead of the tariff announcement by the US on April 2. Reports suggest a rush to export smartphones out of India in March to avoid tariffs (this was before President Trump paused the imposition of tariffs by 90 days).

She said that manufacturing IP sub-indices of export-oriented sectors such as computer and electronics (growing 10.6 per cent y/y in February vs 4.5 per cent in January), pharma (3.1 per cent vs -0.5 per cent), motor-vehicles (8.9 per cent vs 5.55 per cent), for which the US is one of the largest export destination for India, were the only three sectors out of 23 that saw IP growth accelerating between January and February.

“The relief in imposition of reciprocal tariffs may further incentivise the build-up of inventory to step up exports in this 90-day period, though we caution that the uncertainty around US trade policies may impact global external demand, and consequently, domestic manufacturing growth,” Gudwani said.

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Published on April 11, 2025