Sluggish Industrial Production Growth Reaches 10-Month Low of 1.5% in June 2025 for India
India's Industrial Growth Slows to 10-Month Low in June 2025
India's industrial growth took a hit in June 2025, sliding to a 10-month low of 1.5%. This contraction was mainly due to a sharp decline in the mining and electricity sectors, as a result of early monsoon rains and heavy rainfall, according to data released by the Ministry of Statistics and Programme Implementation.
The adverse weather conditions in June 2025 led to a 8.7% contraction in mining activity, a significant drop from the 10.3% growth recorded the previous year. Power production also took a hit, declining by 2.6% in June 2025, compared to 8.6% growth a year ago.
Despite these setbacks, the manufacturing sector showed some resilience, with output growth rising marginally to 3.9% in June 2025 from 3.5% in the year-ago month. The capital goods segment, however, decelerated within the manufacturing sector, with growth slowing to 3.5% in June 2025, compared to 3.6% in the year-ago period.
The data showed that 15 out of 23 industry groups within the manufacturing sector had positive year-on-year growth in June 2025. Eleven out of these 23 groups recorded a positive year-on-year growth, while the remaining eight groups experienced a contraction.
The slowdown in industrial growth had a ripple effect, with the Industrial Production Index (IIP) growth easing to an 11-quarter low of 2.0% in Q1 FY2026. This is less than half of the 5.4% growth recorded during the same period last year.
Future projections by Trading Economics indicate a moderate recovery, forecasting industrial production to increase to 3.2% by the end of the third quarter of 2025 and trend around 4.3% in 2026 and 4.1% in 2027. This suggests an upward trajectory after the near-term slowdown.
The reduced industrial production growth could impact overall economic growth and investment sentiments in the near term. However, the gradual recovery anticipated in the coming years offers some hope for a revival in the Indian economy.
It's important to note that this slowdown was primarily due to natural factors, such as excessive rains and early monsoon season. The opposition's criticism over the sports portfolio being given to a minister who was caught playing Rummy does not have any direct bearing on the industrial growth figures.
References:
- Trading Economics
- Ministry of Statistics and Programme Implementation
- The Hindu BusinessLine
The contraction in mining activity and power production, as mentioned in the report from the Ministry of Statistics and Programme Implementation, is linked to the finance sector, as these industries rely heavily on investment for operations and growth.
Despite the current slowdown in industrial growth, future projections by Trading Economics suggest a recovery in the finance sector, with anticipation of industrial production increasing to 3.2% by Q3 2025, indicating a potential revival for the Indian economy, which is deeply intertwined with the industry and finance sectors.
