FY25 Industrial Growth at 4%; March Up 3%

India’s Industrial Growth Shows Slight Improvement in March

India’s industrial growth showed a modest rise of 3% in March 2025, up from 2.7% in February, according to data released by the government on April 28. The uptick in industrial production, as measured by the Index of Industrial Production (IIP), was largely driven by a slight improvement in infrastructure industries during the month.

Highlights:

• March industrial growth rose to 3% from 2.7% in February.

• The increase in IIP is attributed to growth in key infrastructure sectors.

Core Sector Performance: Steel, Cement, and Electricity Lead Growth

The core sector, which contributes 40% to the IIP, recorded a growth of 3.8% in March, an improvement from 3.4% in February. The strong performance in steel, cement, and electricity generation played a major role in this growth.

• Steel sector: The steel sector showed a growth of 7.1% in March, up from 6.9% in February, signaling a steady improvement.

• Cement sector: Cement production grew by 11.6% in March compared to 10.8% the previous month, reflecting increased demand.

• Electricity generation: Electricity generation experienced the largest surge, growing by 6.2%, up from 3.6% in February, driven by rising temperatures and increased consumption.

Highlights:

• The core sector grew by 3.8%, up from 3.4% in February.

• Key sectors contributing to growth: Steel, Cement, and Electricity.

FY25 Industrial Growth: A Disappointing 4%

While March saw a slight improvement in industrial growth, India’s industrial performance for the entire financial year 2025 remained subdued. The overall industrial growth for FY25 stood at 4%, a sharp decline from the 5.9% growth recorded in FY24.

Highlights:

• FY25 industrial growth registered just 4%, down from 5.9% in FY24.

• Consumer non-durables and manufacturing showed muted growth.

Consumer Demand: Urban vs. Rural Dynamics

Consumer non-durables, which are considered a proxy for urban demand, showed contraction for the majority of the year. On the other hand, consumer durables, which reflect rural demand, demonstrated better growth, pointing to a shift in consumer spending patterns between urban and rural areas.

Highlights:

• Consumer non-durables contracted, indicating weak urban demand.

• Consumer durables showed better results, reflecting rural demand.

Manufacturing Growth: Muted Performance in FY25

Manufacturing growth has remained lackluster throughout FY25. The government now expects the sector to grow by just over 4%, a significant slowdown compared to the 12% growth recorded in the previous fiscal year.

Highlights:

• Manufacturing growth expected to be just over 4%, down from 12% in FY24.

• The government’s revised growth forecast for the sector highlights slower economic momentum.

Slower Growth Ahead

The overall economic growth of India is projected to slow down further. The International Monetary Fund (IMF) forecasts that India’s economic growth will slip to 6.2% in FY26, down from earlier estimates. Global trade tensions and tariffs are expected to weigh heavily on India’s growth prospects.

Highlights:

• India’s economic growth is expected to fall to 6.2% in FY26.

• Global trade tensions and tariffs could further dampen economic growth.