New Delhi [India]: India’s industrial activity experienced a significant boost in January 2025, primarily driven by strong performance in the manufacturing sector, according to a report by ICICI Bank Global Markets.
Among 23 manufacturing industries, 19 showed positive momentum, an improvement from 16 in the previous month. Increased government spending in January further supported this growth, enhancing prospects for meeting budget targets.
“Higher government spending played a crucial role in supporting industrial growth. The outlook remains positive for achieving budget targets, aided by resilient rural demand and non-oil exports,” the report highlighted.
Despite some slowdown in February due to weaker automobile and fuel sales, indicators such as electricity demand and travel activity showed positive trends.
Domestic growth is anticipated to strengthen further, supported by tax incentives for urban areas introduced in the Budget and potential monetary policy easing by the Reserve Bank of India (RBI). However, global trade uncertainties and tariff risks remain potential challenges for India’s export sector.
In January 2025, the Index of Industrial Production (IIP) rose by 5.0% year-on-year (YoY), an improvement from 3.5% in December 2024. Manufacturing output increased by 5.5% YoY, up from 3.0% YoY in the previous month.
Key sectors demonstrated strong performance:
- Petroleum products grew by 8.5% YoY in January, compared to 3.9% in December.
- Electrical equipment rose by 21.7% YoY.
- Fabricated metals increased by 10.5% YoY.
- Basic metals recorded a 6.3% YoY increase.
Capital goods recorded 7.8% YoY growth, while infrastructure and construction goods expanded by 7.0% YoY. Consumer durables saw a 7.2% YoY increase.
Primary goods posted their highest growth in six months at 5.5% YoY, while cement production surged by 14.5% YoY. Consumer non-durables recovered significantly, improving from a 26-month low of -7.6% YoY in December 2024 to -0.2% YoY in January 2025, largely due to increased tobacco production.
Electricity production slowed to 2.4% YoY in January, down from 6.2% in December, though early signs of recovery emerged in February. Mining output increased by 4.4% YoY, up from 2.7% in December, contributing to the positive momentum in industrial activity.