New Delhi, Mar 13 (KNN) India’s industrial activity recorded a significant upturn in January 2025, with the manufacturing sector serving as the primary catalyst for growth, according to a recent report by ICICI Bank Global Markets.
The Index of Industrial Production (IIP) registered a 5.0 percent year-on-year (YoY) increase in January, marking an improvement from the 3.5 percent growth observed in December 2024.
The manufacturing sector demonstrated robust performance, expanding by 5.5 percent YoY in January, a substantial improvement from the 3.0 percent YoY growth recorded in the previous month.
Notably, 19 out of 23 manufacturing industries exhibited positive momentum, reflecting a broader industrial recovery compared to the 16 industries that showed growth in December.
Petroleum products, which constitute the largest component of the manufacturing sector, grew by 8.5 percent YoY in January, significantly higher than the 3.9 percent YoY growth in December.
Other key industries also contributed to the strong performance, with electrical equipment growing by 21.7 percent YoY, fabricated metals by 10.5 percent YoY, and basic metals by 6.3 percent YoY.
The growth trajectory was further reinforced by strong performance across various goods categories.
Capital goods recorded a 7.8 percent YoY growth, infrastructure and construction goods expanded by 7.0 percent YoY, and consumer durables saw a 7.2 percent YoY increase.
Primary goods achieved their highest growth in six months at 5.5 percent YoY, while cement production increased notably by 14.5 percent YoY.
Consumer non-durables showed signs of recovery, improving from a 26-month low of -7.6 percent YoY in December 2024 to -0.2 percent YoY in January 2025, primarily due to increased tobacco production.
Mining output also contributed to the overall positive momentum, increasing by 4.4 percent YoY compared to 2.7 percent in December.
Despite electricity production remaining weak at 2.4 percent YoY in January, down from 6.2 percent in December, early indicators suggest improvement in February.
While some moderation in activity was observed in February due to lower automobile and fuel sales, electricity demand and travel activity have shown an uptick.
Increased government spending in January played a crucial role in supporting industrial growth, and the outlook remains favorable for meeting budget targets, aided by resilient rural demand and non-oil exports.
Domestic growth is expected to gain further momentum, supported by tax incentives for urban India announced in the Budget and potential policy easing by the Reserve Bank of India (RBI).
However, external risks, particularly global tariff uncertainties, could impact India’s export sector, potentially constraining the overall growth trajectory despite the strong domestic fundamentals.
(KNN Bureau)
