Key Highlights
- Overall IIP rose by only 2.9% in February 2025, marking the weakest expansion in half a year.
- Mining, manufacturing and electricity all posted markedly slower growth compared with the same month a year earlier.
- Capital goods were the sole category to register robust acceleration, jumping 8.2% year‑on‑year.
- All use‑based segments slipped month‑on‑month, ending a five‑month streak of positive momentum.
Detailed Insights
The Index of Industrial Production (IIP) for February 2025 expanded at a modest 2.9%, well below the Reuters consensus of 4% and the lowest rate since August 2024. The deceleration stemmed primarily from a high‑base effect—February 2024 had recorded unusually strong outputs—and a palpable slowdown in the three core pillars of the Indian economy: mining (+1.6% vs +8.1% YoY), manufacturing (+2.9% vs +4.9% YoY) and electricity (+3.6% vs +7.6% YoY).
When the data are broken down by use‑based classification, capital goods stood out with an 8.2% surge, a dramatic improvement over the 1.7% rise recorded a year earlier. Intermediate goods grew a modest 1.5%, while consumer non‑durables continued to contract, falling 2.1% (a narrower decline than the 3.2% drop in February 2024). Crucially, every sub‑segment recorded a month‑on‑month decline relative to January 2025, terminating a five‑month run of growth.
Analysts attribute the slowdown to the lingering impact of the previous year’s strong performance and weaker demand in mining and manufacturing. Nevertheless, the power sector’s resilience and the continued vigor of capital and infrastructure goods provided a partial cushion. Some experts anticipate a modest rebound in March as firms rebuild inventories ahead of anticipated U.S. tariff revisions.
Key Concepts
- Index of Industrial Production (IIP): A statistical measure that captures the real output of the organized manufacturing sector, mining, and electricity generation in India.
- Base effect: The influence on growth rates caused by unusually high (or low) performance in the comparison period, which can exaggerate or mask current trends.
- Capital goods: Durable items such as machinery, equipment, and infrastructure components that are used to produce other goods or services.
- Intermediate goods: Products that are not final consumer items but are used as inputs in the production of other goods.
- Consumer non‑durables: Short‑life consumer products like food, beverages, and toiletries that are consumed quickly.