Post by : Jyoti Gupta

Photo:Reuters

India’s industrial activity slowed down sharply in May 2025, with factory output rising by just 1.2 percent—the lowest growth seen in the past nine months. The dip has been linked to weaker performances in the manufacturing, mining, and electricity sectors, which were affected by the early arrival of the monsoon.

This slowdown comes in contrast to May 2024, when industrial production had grown by 6.3 percent. The latest numbers reflect a clear loss of momentum. The Index of Industrial Production (IIP), which tracks the performance of various industrial sectors, had shown some stability in recent months, but May’s data points to renewed stress across key areas.

In addition to the May numbers, the growth figure for April 2025 was also revised slightly down to 2.6 percent from the earlier estimate of 2.7 percent. The last time industrial production was this slow was in August 2024, when growth came to a complete halt.

The manufacturing sector, which forms a big part of industrial activity, grew only 2.6 percent in May 2025, down from 5.1 percent a year earlier. Mining shrank slightly by 0.1 percent after a solid performance last year, while electricity production saw a sharp fall of 5.8 percent compared to the strong growth of 13.7 percent recorded in May 2024.

Overall, in the first two months of the financial year 2025–26, industrial growth stood at just 1.8 percent—much lower than the 5.7 percent seen in the same period last year.

There were a few bright spots. Capital goods—such as machinery and equipment—registered a strong growth of 14.1 percent, mainly because of a low base last year. But other areas were less encouraging. Consumer durable goods, like televisions and refrigerators, declined by 0.7 percent. Consumer non-durables, which include everyday items like packaged food and toiletries, also fell by 2.4 percent.

Goods used in construction and infrastructure rose 6.3 percent, but that too was slower than the 7.6 percent growth seen in May last year. Primary goods, which are basic materials used in further production, saw a drop of 1.9 percent. Meanwhile, intermediate goods held steady with 3.5 percent growth, the same as the previous year.

Experts believe that the early onset of the monsoon played a key role in this slowdown by cutting down mining operations and reducing the need for electricity. The sluggish growth at the beginning of the financial year is raising concerns about how much the industrial sector will contribute to the overall economy in the first quarter of FY2026.