January 2025 IIP bounces to 5.01%, on manufacturing boost

13 Mar 2025 , 12:01 PM

JANUARY 2025 IIP GROWTH 5.01% GETS MANUFACTURING BOOST

The IIP growth surged from 3.55% (revised up from 3.22%) in December 2024, to 5.01% in January 2025. IIP is announced with a lag of one month. There was limited role of base effect in this IIP spike in January 2025, with most of the positive thrust coming from the manufacturing basket. There were also two favourable revisions to previous IIP data. The IIP growth estimate for December 2024 saw the first upward revision from 3.22% to 3.55%. At the same time, the final revision for October 2024 saw IIP growth upgraded from 3.66% to 3.73%. The August 2024 contraction had been earlier neutralized to zero growth.

IIP TROIKA – MINING, MANUFACTURING, ELECTRICITY

IIP is classified into 3 components; mining, manufacturing, and electricity. For January 2025; mining expanded yoy by 4.4% and electricity production at 2.4%. However, the boost came from manufacturing which grew 5.5% in January 2025. With 77.6 weightage in the IIP basket; manufacturing pulled the overall IIP higher.

What about the high frequency MOM IIP growth. For January 2025, the MOM mining output grew by 5.24%, manufacturing output expanded by 1.47% MOM, while electricity expanded by 4.72% on an MOM basis. As a result, overall IIP expanded by 2.28% MOM; indicating a revival in short term IIP sentiments.

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; albeit there was the base effect in December 2024.

Month	IIP Growth (%)
Jan-24	4.21%
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	5.01%

Data Source: MOSPI

There has been a perceptible shift in IIP growth to a higher trajectory with January 2025 being the best IIP growth since May 2024. If you look at IIP growth in the last 5 months, it averaged 3.09%, while in the 7 months prior to that, IIP growth had averaged a much healthier 5.23%. What is intriguing about the bounce in IIP in January 2025 is; whether it is due to capex by the government, or despite the trade tensions caused by Trump.

JANUARY 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	Oct-24	Nov-24	Dec-24	Jan-25
Manufacture of food products	5.3025	5.7	-3.5	-5.0	0.6
Manufacture of beverages	1.0354	3.1	-1.3	3.0	2.3
Manufacture of tobacco products	0.7985	11.6	0.8	7.6	16.0
Manufacture of textiles	3.2913	0.8	3.6	1.4	3.3
Manufacture of wearing apparel	1.3225	6.3	18.6	5.3	2.9
Manufacture of leather and related products	0.5021	-4.5	-3.4	-7.0	-5.3
Manufacture of wood products	0.1930	10.1	12.1	17.7	8.2
Manufacture of paper products	0.8724	-0.3	2.2	-1.8	-3.3
Printing and reproduction of recorded media	0.6798	-10.3	-8.1	-5.8	-9.4
Manufacture of coke and refined petroleum products	11.7749	5.6	2.0	3.9	8.5
Manufacture of chemical products	7.8730	2.3	3.2	2.7	2.7
Manufacture of pharmaceuticals	4.9810	1.9	2.9	-9.7	-0.7
Manufacture of rubber and plastics products	2.4222	7.0	-1.5	0.1	5.2
Manufacture of other non-metallic mineral products	4.0853	2.7	8.0	3.3	10.2
Manufacture of basic metals	12.8043	5.1	7.1	7.6	6.3
Manufacture of fabricated metal products	2.6549	8.0	17.3	9.0	10.5
Manufacture of computer, electronic and optical	1.5704	0.9	19.9	3.1	4.6
Manufacture of electrical equipment	2.9983	32.8	36.1	40.5	21.7
Manufacture of machinery and equipment	4.7653	-2.5	7.9	10.6	4.7
Manufacture of motor vehicles, trailers	4.8573	-1.7	6.1	-1.9	1.8
Manufacture of other transport equipment	1.7763	17.4	10.3	3.6	20.4
Manufacture of furniture	0.1311	19.6	39.7	21.1	16.5
Other manufacturing	0.9415	-11.5	-13.5	10.4	0.7
MINING	14.3725	0.9	1.9	2.7	4.4
MANUFACTURING	77.6332	4.4	5.5	3.4	5.5
ELECTRICITY	7.9943	2.0	4.4	6.2	2.4
OVERALL IIP	100.0000	3.7	5.0	3.5	5.0

Data Source: MOSPI

The last column shows the most current IIP reading for January 2025. Let us first look at the positive drivers of IIP growth. The positive thrust is coming largely from sectors like electrical equipment, transport equipment, furniture, tobacco products, fabricated metals, and minerals.

The negative pressure on IIP is coming from sectors like printing & recorded media, leather products, paper products and pharmaceuticals. Thanks to the tariff chaos created by the Trump administration, the story has shifted back from weak domestic demand to weak export demand. The good news is that most of the basic industries and infrastructure related segments are still seeing robust growth.

HOW DOES THE ANNUALIZED FY25 IIP DATA LOOK?

The latest fiscal year FY25 now has 10 months cumulative data from April 2024 to January 2025; which helps extrapolate a picture for FY25. The cumulative IIP growth for FY25 is up 20 bps to 4.2%; albeit sharply lower than the 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	-1.7
Manufacture of beverages	1.0354	11.5	19.9	5.1	3.2
Manufacture of tobacco products	0.7985	8.7	-0.6	-8.3	3.2
Manufacture of textiles	3.2913	29.3	-8.7	0.1	1.0
Manufacture of wearing apparel	1.3225	27.4	-7.4	-14.1	7.9
Manufacture of leather and related products	0.5021	1.3	-5.8	-1.0	-2.4
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	-0.3
Printing and reproduction of recorded media	0.6798	12.4	23.4	-1.4	-5.7
Manufacture of coke and refined petroleum	11.7749	8.9	5.7	3.9	3.7
Manufacture of chemicals and chemical products	7.8730	4.3	6.9	-1.5	2.4
Manufacture of pharmaceuticals	4.9810	1.3	-2.4	8.0	-1.3
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	3.2
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	7.6
Manufacture of computer, electronic and optical	1.5704	11.1	-6.4	-11.3	7.6
Manufacture of electrical equipment	2.9983	12.2	-4.2	7.5	24.5
Manufacture of machinery and equipment	4.7653	11.0	10.5	6.6	3.0
Manufacture of motor vehicles and trailers	4.8573	18.4	19.3	11.6	3.1
Manufacture of other transport equipment	1.7763	1.6	11.6	13.9	14.0
Manufacture of furniture	0.1311	23.3	16.4	-5.5	25.6
Other manufacturing	0.9415	49.0	-3.0	-6.2	-4.8
MINING	14.3725	12.2	5.8	7.5	3.4
MANUFACTURING	77.6332	11.8	4.7	5.5	4.2
ELECTRICITY	7.9943	7.9	8.9	7.1	5.1
OVERALL IIP	100.0000	11.4	5.2	5.9	4.2

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, food products, leather 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!