Industrial Production Slows to 6-Month Low of 2.9% in February 2025

India’s industrial activity witnessed a marked deceleration in February 2025, with the Index of Industrial Production (IIP) expanding at just 2.9%, the slowest pace in six months. The sharp drop was largely attributed to sluggish growth across key sectors—mining, manufacturing, and electricity—and the high base effect from the previous year. While most use-based categories registered reduced output, capital goods emerged as the only bright spot with a notable uptick in production.

Key Highlights

IIP Growth Overview

• IIP growth (Feb 2025): 2.9% (vs 4% forecast by Reuters)
• Lowest in 6 months
• Growth in Feb 2024: Significantly higher across sectors

Sectoral Performance

• Mining: +1.6% (vs +8.1% in Feb 2024)
• Manufacturing: +2.9% (vs +4.9% in Feb 2024)
• Electricity: +3.6% (vs +7.6% in Feb 2024)

Use-Based Classification Trends

• Capital Goods: +8.2% (strong growth; Feb 2024: +1.7%)
• Intermediate Goods: +1.5% (slowest among all segments)
• Consumer Non-Durables: –2.1% (decline continues; Feb 2024: -3.2%)
• All other segments recorded slower growth compared to previous year

Month-on-Month Concerns

• All sub-sectors under use-based classification saw a decline compared to January 2025, ending a 5-month streak of positive momentum

Expert Insights

Paras Jasrai (India Ratings & Research)

• Growth slowed due to high base and weaker performance in mining/manufacturing.

Aastha Gudwani (Barclays)

• Manufacturing slowdown was key, though power demand helped cushion the drop.
• Capital and infrastructure goods remain resilient.
• IIP likely improved in March due to inventory build-up ahead of U.S. tariff updates.