India’s Industrial Production Surges by 5% in January 2025, Led by Manufacturing and Mining
India’s industrial production experienced a notable uptick in January 2025, with the Index of Industrial Production (IIP) registering a 5% year-on-year growth, surpassing the previous month’s 3.2% increase and exceeding economists’ expectations of a 3.5% rise. This growth was primarily driven by robust performances in the manufacturing and mining sectors, which expanded by 5.5% and 4.4%, respectively.
The manufacturing sector’s acceleration from December’s 3.4% growth to 5.5% in January indicates a strengthening industrial base. Similarly, the mining sector’s growth improved from 2.7% in December to 4.4% in January, reflecting increased extraction activities. However, electricity generation saw a slowdown, growing by 2.4% in January compared to 6.2% in December, suggesting potential challenges in the energy sector.
Consumer durables output, encompassing products like household appliances and vehicles, rose by 7.2% in January, slightly down from December’s 8.3% growth. Capital goods production, indicative of investment in infrastructure and industrial capacity, increased by 7.8% in January, though this was a decrease from December’s revised 10.4% growth. These figures suggest sustained consumer demand and ongoing investments in capital infrastructure, albeit at a moderated pace.
The core infrastructure sectors, which include coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity, collectively grew by 4.6% in January. Notably, cement production surged by 14.5%, indicating a potential boom in construction activities. Refinery products and steel production also saw increases of 8.3% and 3.7%, respectively, reflecting a robust industrial demand.
The Purchasing Managers’ Index (PMI) for manufacturing reached a six-month high of 57.7 in January, up from December’s 56.4, signaling strong expansion in factory activity. This growth was driven by resilient demand and increased output, leading firms to hire at a record pace. The PMI has remained above the 50-mark, which separates expansion from contraction, since July 2021, underscoring sustained growth in the manufacturing sector.
Economists, such as Madan Sabnavis of Bank of Baroda, suggest that if these trends persist, full-year industrial growth could be expected between 5% and 5.5%. This positive outlook is further bolstered by the recent decline in retail inflation, which fell to a seven-month low of 3.6% in February, primarily due to a significant drop in food prices. The combination of rising industrial output and easing inflation may provide the Reserve Bank of India with the impetus to consider further monetary policy easing to support economic growth.
In summary, the 5% growth in industrial production in January reflects a strengthening industrial sector, driven by robust performances in manufacturing and mining. While certain areas like electricity generation experienced slower growth, the overall industrial landscape appears positive, supported by strong demand and favorable economic indicators.
