February 2025 IIP falls to 2.86%, in sync with core sector easing

15 Apr 2025 , 11:07 AM

FEBRUARY 2025 IIP AT 2.86%; AS MANUFACTURING FACES STRESS

The IIP growth fell sharply from 5.21% (revised up from 5.01%) in January 2025, to 2.86% in February 2025. This almost corresponds with the core sector growth falling from 5.08% to 2.85% in this period. The core sector growth, after all, has a 40% weight in the IIP basket. There was one favourable revision to previous IIP data. The IIP growth estimate for January 2025 saw the first upward revision of 20 bps from 5.01% to 5.21%. However, final revision for November 2024 saw IIP growth static at 4.96%. The fall in IIP can be partially attributed to the base effect as IIP had risen from 4.21% to 5.60% between Jan-24 and Feb-24 last year.

IIP TROIKA – MINING, MANUFACTURING, ELECTRICITY

IIP is classified into 3 components; mining, manufacturing, and electricity. For February 2025; mining growth tapered from 4.4% to 1.6%; while manufacturing growth halved from 5.8% to 2.9% MOM. However, electricity production improved from 2.4% to 3.6% in Feb-25. With 77.6 weightage in the IIP basket; manufacturing pulled the overall IIP lower.

High frequency MOM IIP growth has come under intense pressure. For February 2025, the MOM mining output contracted by -5.84%%, manufacturing contracted by -6.83%, and electricity contracted by -3.91%. As a result, overall IIP also contracted by -6.37% MOM; indicating a negative turn in short term sentiments about growth.

IIP GROWTH STORY IN LAST 1 YEAR

After the low of August (back from negative to neutral), the IIP has been consistently building heft in the last 4 months; although the pace slackened in February 2025.

Month	IIP Growth (%)
Feb-24	5.60%
Mar-24	5.47%
Apr-24	5.19%
May-24	6.25%
Jun-24	4.93%
Jul-24	4.98%
Aug-24	0.00%
Sep-24	3.23%
Oct-24	3.73%
Nov-24	4.96%
Dec-24	3.55%
Jan-25	5.21%
Feb-25	2.86%

Data Source: MOSPI

There has been a perceptible shift in IIP growth to a higher trajectory post the lows of August 2024, when the IIP growth was neutral. February fall in IIP could be due to slow capex spending by the government and global trade uncertainty. If you look at IIP growth in the previous 5 months, it averaged 4.14%, while in the 7 months prior to that, IIP growth had averaged a much healthier 4.64%. The actual intensity and impact of the trade tariffs and a recovery in growth overall, would determine the direction of IIP growth in 2025.

FEBRUARY 2025 IIP: DISSECTING THE IIP PRODUCT BASKET

The table captures comparative IIP growth for last 4 months, with respective components. Overall numbers for mining, manufacturing, and electricity are segregated.

Product Basket	Weights	Nov-24	Dec-24	Jan-25	Feb-25
Manufacture of food products	5.3025	-3.5	-5.0	0.1	-6.1
Manufacture of beverages	1.0354	-1.3	3.0	2.5	-4.3
Manufacture of tobacco products	0.7985	0.6	7.6	16.3	-1.6
Manufacture of textiles	3.2913	3.4	1.4	3.6	2.4
Manufacture of wearing apparel	1.3225	18.7	5.3	2.5	-4.4
Manufacture of leather and related products	0.5021	-3.2	-7.0	-6.0	-9.4
Manufacture of wood products	0.1930	12.1	17.7	8.3	4.8
Manufacture of paper products	0.8724	2.3	-1.8	-3.0	-9.1
Printing and reproduction of recorded media	0.6798	-1.8	-5.8	-8.8	-8.6
Manufacture of coke and refined petroleum products	11.7749	2.0	3.9	8.6	0.5
Manufacture of chemical products	7.8730	3.1	2.7	2.6	-2.9
Manufacture of pharmaceuticals	4.9810	2.9	-9.7	-0.5	3.1
Manufacture of rubber and plastics products	2.4222	-1.4	0.1	5.2	4.4
Manufacture of other non-metallic mineral products	4.0853	7.6	3.3	10.3	8.0
Manufacture of basic metals	12.8043	7.1	7.6	6.7	5.8
Manufacture of fabricated metal products	2.6549	17.5	9.0	9.6	6.7
Manufacture of computer, electronic and optical	1.5704	19.9	3.1	4.5	10.6
Manufacture of electrical equipment	2.9983	36.1	40.5	21.6	9.3
Manufacture of machinery and equipment	4.7653	7.9	10.6	4.8	3.1
Manufacture of motor vehicles, trailers	4.8573	6.1	-1.9	5.6	8.9
Manufacture of other transport equipment	1.7763	10.3	3.6	20.4	8.2
Manufacture of furniture	0.1311	39.6	21.1	17.0	5.8
Other manufacturing	0.9415	-13.4	10.4	0.1	-6.3
MINING	14.3725	1.9	2.7	4.4	1.6
MANUFACTURING	77.6332	5.5	3.4	5.8	2.9
ELECTRICITY	7.9943	4.4	6.2	2.4	3.6
OVERALL IIP	100.0000	5.0	3.5	5.2	2.9

Data Source: MOSPI

The last column shows the most current IIP reading for February 2025. Let us first look at the positive drivers of IIP growth. The positive thrust is coming largely from sectors like Computers and Electronics, electrical equipment, motor vehicles, transport equipment, non-metallic minerals, fabricated metals, basic metals, and furniture.

The negative pressure on IIP is coming from sectors like leather products, paper products, printing & recorded media, other manufacturing, food products, and wearing apparel. Thanks to the tariff chaos created by the Trump administration, the story has shifted back from weak domestic demand to weak export demand. However, we must not forget that the Indian export basket is actually moving up the value chain with electronic and electrical equipment dominating. That is the good news.

HOW DOES THE ANNUALIZED FY25 IIP DATA LOOK?

Fiscal year FY25 now has 11 months cumulative data from April 2024 to February 2025. The cumulative IIP growth for FY25 is down 10 bps to 4.1%; but sharply lower than last 3 years.

Product Basket	Weights	2021-22	2022-23	2023-24	2024-25
Manufacture of food products	5.3025	5.9	3.8	1.6	-2.2
Manufacture of beverages	1.0354	11.5	19.9	5.1	2.6
Manufacture of tobacco products	0.7985	8.7	-0.6	-8.3	2.8
Manufacture of textiles	3.2913	29.3	-8.7	0.1	1.2
Manufacture of wearing apparel	1.3225	27.4	-7.4	-14.1	6.6
Manufacture of leather and related products	0.5021	1.3	-5.8	-1.0	-3.2
Manufacture of wood products	0.1930	15.1	-0.8	-5.9	5.8
Manufacture of paper and paper products	0.8724	17.7	0.6	-3.6	-1.0
Printing and reproduction of recorded media	0.6798	12.4	23.4	-1.4	-5.4
Manufacture of coke and refined petroleum	11.7749	8.9	5.7	3.9	3.4
Manufacture of chemicals and chemical products	7.8730	4.3	6.9	-1.5	1.9
Manufacture of pharmaceuticals	4.9810	1.3	-2.4	8.0	-0.9
Manufacture of rubber and plastics products	2.4222	8.0	0.5	4.4	4.6
Manufacture of other non-metallic mineral products	4.0853	20.1	6.6	6.5	3.6
Manufacture of basic metals	12.8043	18.6	8.1	11.6	6.5
Manufacture of fabricated metal products	2.6549	10.9	-1.6	8.3	7.4
Manufacture of computer, electronic and optical	1.5704	11.1	-6.4	-11.3	7.9
Manufacture of electrical equipment	2.9983	12.2	-4.2	7.5	22.9
Manufacture of machinery and equipment	4.7653	11.0	10.5	6.6	2.9
Manufacture of motor vehicles and trailers	4.8573	18.4	19.3	11.6	4.1
Manufacture of other transport equipment	1.7763	1.6	11.6	13.9	13.5
Manufacture of furniture	0.1311	23.3	16.4	-5.5	23.4
Other manufacturing	0.9415	49.0	-3.0	-6.2	-4.9
MINING	14.3725	12.2	5.8	7.5	3.2
MANUFACTURING	77.6332	11.8	4.7	5.5	4.1
ELECTRICITY	7.9943	7.9	8.9	7.1	5.0
OVERALL IIP	100.0000	11.4	5.2	5.9	4.1

Data Source: MOSPI (FY25 is 10-Months data)

What are the gaining and losing sectors on annualized IIP growth? Among the gaining sectors in IIP are furniture, electrical equipment, and transport equipment. Among the sectors under pressure are printing & recorded media, other manufacturing, leather products, food products, paper products, and pharmaceuticals. For now, it looks like the domestic infrastructure is once again filling up the gap caused by the export slowdown; but the short term trend may be changing for the better!