IIP growth slips to 14-month low of 0.4% in October as output weakens

India's industrial output slowed sharply to 0.4 per cent in October-the weakest in 14 months-hit by fewer working days, a decline in electricity generation

India’s industrial production growth slowed to a 14-month low of 0.4 per cent in October, down from an upwardly revised 4.6 per cent in September, due to fewer working days and a sharp decline in electricity generation, according to data released by the National Statistics Office (NSO) on Monday. The last time Index of Industrial Production (IIP) growth was lower than October’s was in August 2024, when output had flattened.

 

In October 2024, growth in IIP had stood at 3.7 per cent. In the first seven months of the current financial year (April–October), average IIP growth was 2.7 per cent, compared with 4 per cent in the same period of the previous financial year.

 

Data showed that manufacturing output, which accounts for about 78 per cent of the index, grew 1.8 per cent in October, down from 5.6 per cent in September. Mining output contracted for the second consecutive month by 1.8 per cent, while electricity generation fell 6.9 per cent. The statistics ministry credited the decline in electricity generation to an extended monsoon and milder temperatures across several states and Union Territories.

 

Overall, of the 23 industry groups, 14 — including key consumer and export-oriented sectors such as food product, apparel, textile, leather, and pharmaceutical — recorded year-on-year contractions in October. 

 

Only nine industry groups, such as basic metals (6.6 per cent), coke and refined petroleum products (6.2 per cent), and motor vehicle, trailer, and semi-trailer (5.8 per cent), reported positive growth for the month.

 

Among use-based categories, all six sub-segments saw a deterioration in year-on-year performance in October compared with the previous month. Consumer durables contracted 0.5 per cent in October after growing at a 10-month high of 10.2 per cent in September. Primary goods output fell 0.6 per cent, reflecting weak mining and electricity performance, while intermediate goods and capital goods grew 0.9 per cent and 2.4 per cent, respectively, down from 6.3 per cent and 5.4 per cent in September.

 

Infrastructure goods grew 7.1 per cent in October, ending a streak of double-digit growth over the past three months. Consumer non-durables, or fast-moving consumer goods, continued to contract, declining 4.4 per cent in October, with the pace of decline accelerating.

 

Rajani Sinha, chief economist at CareEdge Ratings, attributed growth in infrastructure and construction goods to strong capital expenditure (capex) by the central and state governments. “Our analysis of order books for a sample of capital goods companies points to a favourable capex outlook. However, ongoing global uncertainties are likely to remain key headwinds,” she added.

 

Aditi Nayar, chief economist at Icra, observed that the adverse impact of US tariffs and penalties likely affected production across some manufacturing sub-segments. “Given the base effects and the shifts in the festival calendar in 2025 versus 2024, it would be more prudent to assess the average for October and November once the latter month’s data becomes available,” she said.

 

Aditi Gupta, economist at Bank of Baroda, said domestic growth has gained momentum from the combination of festival demand and goods and services tax (GST) rate cuts. “The momentum is expected to continue in the coming months. However, US tariffs continue to inject a high degree of uncertainty into the outlook. In this regard, successful completion of the US–India trade deal would be crucial for a meaningful recovery in India’s manufacturing sector.”

 

Echoing similar views, Sinha said: “Several factors, such as reductions in the income-tax rate, GST rate rationalisation, and easing inflationary pressures, have supported consumption. While rural demand remains steady, broad-based momentum in domestic demand will be critical for sustaining IIP growth going forward.”