India’s Industrial Output Falls to Nine-Month Low of 1.2% in May 2025

  India’s Industrial Output Falls to Nine-Month Low of 1.2% in May 2025





India’s industrial output dropped to a nine-month low of 1.2% in May 2025, down from 2.6% in April, as heavy rains and weakened sectoral performance weighed on overall growth, according to official data released on June 30.

Aditi Nayar, Chief Economist at ICRA, noted that the early arrival of the monsoon adversely impacted mining activities and reduced electricity demand. Alongside weak manufacturing activity, these factors contributed to the subdued Index of Industrial Production (IIP) performance in May.

This decline is in line with the country’s core sector output, which also slowed to 0.7%, the lowest in nine months, from 1% in April.

Sector-Wise Highlights:

  • Electricity generation recorded its sharpest decline in five years, falling by 5.8%.
  • Manufacturing growth remained muted, contributing little to overall output.
  • Mining showed continued weakness, contracting by 0.1% for the second straight month.

Under the use-based classification, three of the six categories posted negative growth:

  • Primary goods contracted by 1.9%, a sharp dip from 0.2% growth in April.
  • Consumer durables fell by 0.7%, reversing strong 6.2% growth in the previous month.
  • Non-durable consumer goods remained in the negative zone for the fourth month, falling 2.4%.

Positive Developments in Infrastructure and Capital Goods:

Despite the decline in consumer-driven sectors, infrastructure and capital goods continued to perform well. Capital goods grew by 14.1%, marginally higher than the 14% seen in April. Construction-related industries also showed improvement, rising from 4.7% to 6.3%.

Government capital expenditure increased notably, with 19.7% of the Budget utilized in May compared to 12.9% in April, supporting investment-led growth.

Outlook:

Experts suggest India’s economic momentum may slow in Q1 FY2026 compared to the 7.4% growth recorded in the last quarter of FY2025. Nayar noted that subdued industrial volume growth could negatively affect Gross Value Added (GVA) for the quarter.

Adding to the concerns, Paras Jasrai, Associate Director at India Ratings and Research, observed a 2.1% year-on-year drop in daily power generation in June, signaling continued weakness in factory output for the month.

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