India's Industrial Production Remains Below 5% In July

(MENAFN- KNN India) New Delhi, Aug 29 (KNN) India's industrial production accelerated to a four-month high of 3.5 per cent in July 2025, marking the strongest growth since March when industrial output reached 3.9 per cent, according to official data released Thursday.

The Index of Industrial Production (IIP), which measures factory output, showed improvement from the previous month, though it remained below the 5 per cent growth recorded in July 2024.

The National Statistics Office (NSO) maintained its revised June growth figure at 1.5 per cent, consistent with provisional estimates released the previous month.

The July uptick was primarily driven by robust performance in the manufacturing sector, which emerged as the key contributor to overall industrial growth during the month.

Manufacturing output demonstrated strong momentum, expanding 5.4 per cent in July 2025 compared to 4.7 per cent growth in the corresponding period last year.

This represented the sector's highest growth rate in six months, up from 3.7 per cent recorded in June 2025. The manufacturing sector had previously peaked at 5.8 per cent in January 2025.

However, the mining sector presented a contrasting picture, contracting 7.2 per cent in July 2025, a sharp reversal from the 3.8 per cent growth witnessed in July 2024.

Power generation also showed subdued performance, recording modest growth of just 0.6 per cent, significantly lower than the 7.9 per cent expansion seen in the same month the previous year.

For the April-July period of fiscal year 2026, India's cumulative industrial production grew 2.3 per cent, representing a deceleration from the 5.4 per cent growth achieved during the same four-month period in the previous fiscal year.

This slower pace reflects the challenges faced by the industrial sector in maintaining the momentum seen in earlier periods.

Aditi Nayar, Chief Economist, ICRA, highlighted that manufacturing growth was supported by construction inputs and consumer durables.

She noted that the broad-based improvement across sectors contributed to the overall IIP growth acceleration, though mining and electricity sectors continued to face headwinds despite some easing of heavy rainfall impacts.

Looking ahead, Nayar indicated that improved monetary policy transmission and the recent announcement of GST rationalisation could bolster urban consumption sentiment.

However, she cautioned that discretionary spending might be deferred until lower tax rates take effect, potentially constraining IIP growth below 3 per cent in August 2025.

Additionally, disruptive monsoon rainfall in certain regions could further impact industrial performance.

Within the manufacturing sector, 14 out of 23 industry groups registered positive year-on-year growth in July 2025. The capital goods segment showed growth of 5 per cent, though this was lower than the 11.7 per cent expansion recorded in July 2024.

Consumer durables growth moderated to 7.7 per cent from 8.2 per cent in the corresponding period last year.

Consumer non-durables demonstrated resilience with 0.5 per cent growth in July 2025, recovering from a 4.2 per cent contraction in July 2024. The infrastructure and construction segment emerged as a strong performer, posting 11.9 per cent growth compared to 5.5 per cent in the previous year.

The data revealed mixed performance across different categories, with primary goods output contracting 1.7 per cent in July 2025, down from 5.9 per cent growth a year earlier.

Intermediate goods expanded 5.8 per cent, slightly below the 7 per cent growth recorded in July 2024, indicating varied demand patterns across different segments of the industrial economy.

(KNN Bureau)

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