India's Industrial Production Growth Slows to Nine-Month Low of 1.2% in May 

In May 2025, India’s industrial production, as measured by the Index of Industrial Production (IIP), declined sharply to a nine-month low of 1.2% year-over-year. This represents a significant slowdown from the 2.7% growth recorded in April 2025 (previously 2.6%) and a notable decline from the 6.3% growth recorded in May of the same year. 

The latest Quick Estimates, released on Monday by the Ministry of Statistics and Programme Implementation (MoSPI), indicate that this moderation was primarily driven by weak performances in the electricity and mining sectors, alongside sluggish growth in the manufacturing sector. 

Sectoral Breakdown 

• Manufacturing: This sector, which accounts for nearly 78% of the IIP, saw its growth decline to 2.6% in May 2025, down from 5.1% in May 2024. Despite the overall slowdown, 13 out of 23 industry groups within manufacturing registered positive growth. Key contributors included “manufacture of machinery and equipment n.e.c.” (11.8%), “manufacture of other non-metallic mineral products” (6.9%), and “manufacture of basic metals” (6.4%). 

• Mining: Mining output contracted by 0.1% in May, reversing the 6.6% growth observed a year ago. This marks the second consecutive month of contraction for the sector. 

• Electricity:  The electricity industry saw a steep downturn in May 2025, shrinking by 5.8%. This is the biggest decline for the industry since June 2020 and a substantial drop from the strong 13.7% rise during the same time last year. 

Use-Based Classification: Mixed Signals 

A mixed picture was painted by the performance across use-based categories: 

• Capital Goods: In May 2025, this industry, which is sometimes seen as an indicator of investment activity, saw robust year-over-year growth of 14.1%. It had grown at its fastest rate in 19 months.
   

• Infrastructure/Construction Goods:  This sector’s output climbed 6.3% in May from 4.7% in April, most likely due to higher government capital spending. 

• Intermediate Goods: Grew by 3.5%.
   

• Primary Goods: Contracted by 1.9%.
   

• Consumer Durables: After 17 months of increase, the category saw a 0.7% decline. Lower-than-normal temperatures and a strong base effect were partially blamed for this decline.
   

• Consumer Non-Durables: For the fourth consecutive month, consumer non-durables fell 2.4%, continuing its contractionary phase and indicating a sustained downturn in consumer demand.
   

• Electricity: The electricity industry saw a steep downturn in May 2025, shrinking by 5.8%. This is the biggest decline for the industry since June 2020 and a substantial drop from the strong 13.7% rise during the same time last year. 

What’s Ahead?
Economists attribute the overall slowdown to factors such as the early onset of the monsoon, which can dampen activity in mining and reduce electricity demand, as well as muted growth in manufacturing.

Aditi Nayar, Chief Economist at ICRA, noted that the underlying trends were mixed, with contractions in several use-based categories despite the substantial expansion in capital goods. She suggested that the “tepid industrial volume growth in the first two months of the quarter doesn’t augur well for industrial GVA growth in Q1 FY26.” 

For the combined April-May period of FY26, India’s industrial production grew by 1.8%, significantly lower than the 5.7% recorded during the same period in FY25. This indicates a fragile and uneven recovery in industrial activity, influenced by both domestic demand conditions and global economic uncertainties. 

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