March 2025 IIP edges up to 3.0%, as electricity picks up steam

28 Apr 2025 , 09:12 PM

MARCH 2025 IIP AT 3.0%; ELECTRICITY GATHERS STEAM

IIP growth edged up to 3.0% in March 2025; from 2.72% (revised lower from 2.86%) in February 2025. Effective March, the IIP announcement is being pulled back by 14 days, which will be the practice in future also. That makes it more in sync with inflation data. The IIP growth estimate for February 2025 saw the first downward revision of 14 bps from 2.86% to 2.72%. However, final revision for December 2024 saw IIP growth raised by 19 bps from 3.55% to 3.74%. The year-ago base effect, did influence the IIP edging up in Mar-25.

IIP TROIKA – MINING, MANUFACTURING, ELECTRICITY

IIP is classified into 3 components; mining, manufacturing, and electricity. For March 2025; mining growth tapered further from 1.6% to 1.4% (down 400 bps in last 2 months). Manufacturing growth improved from 2.8% to 3.0% over last month. However, electricity production in March 2025 gathered steam from 3.6% to 6.3% (up 390 bps in 2 months).

High frequency MOM IIP growth has shown a positive revival. For March 2025, the MOM mining output expanded 10.5%, manufacturing expanded 8.42%, while electricity expanded by 11.91%. As a result, overall IIP also expanded by 9.07% MOM; indicating a sharply positive turn in high frequency sentiments on industrial growth.

IIP GROWTH STORY IN LAST 1 YEAR

Despite the recovery post August 2024, the IIP numbers have been increasingly volatile in recent months.

Month	IIP Growth (%)
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	3.74%
Jan-25	5.21%
Feb-25	2.72%
Mar-25	3.00%

Data Source: MOSPI

There has been a perceptible upward shift in IIP growth post the lows of August 2024, although it has become very volatile in recent months. March IIP does not reflect the impact of the China tariffs, which would be reflected in April data. If you look at IIP growth in last 5 months, it averaged 4.07%, while it averaged 4.29% in the 7 months prior to that. Going ahead, the intensity and impact of trade tariffs will determine IIP growth trajectory in 2025.

MARCH 2025 IIP: DISSECTING THE IIP PRODUCT BASKET

The table captures comparative IIP growth for last 4 months, with respective components.

Product Basket	Weights	Dec-24	Jan-25	Feb-25	Mar-25
Manufacture of food products	5.3025	-4.1	0.2	-6.1	-8.0
Manufacture of beverages	1.0354	2.9	4.0	-2.6	3.1
Manufacture of tobacco products	0.7985	6.7	14.5	-1.3	23.4
Manufacture of textiles	3.2913	1.7	3.6	2.5	4.9
Manufacture of wearing apparel	1.3225	5.3	3.2	-3.3	1.3
Manufacture of leather products	0.5021	-7.0	-6.1	-9.0	-8.4
Manufacture of wood products	0.1930	17.7	8.3	5.0	4.9
Manufacture of paper products	0.8724	-1.5	-3.0	-8.8	-6.1
Printing and recorded media	0.6798	-5.9	-8.8	-11.1	-11.7
Manufacture of coke and refined petroleum	11.7749	3.9	8.6	0.5	2.0
Manufacture of chemical products	7.8730	2.7	2.4	-2.8	-2.5
Manufacture of pharmaceuticals	4.9810	-9.5	0.2	3.0	-4.6
Manufacture of rubber and plastics	2.4222	0.1	5.2	3.9	1.4
Manufacture of other non-metallic minerals	4.0853	7.2	10.0	8.2	8.5
Manufacture of basic metals	12.8043	7.5	6.7	5.2	6.9
Manufacture of fabricated metal products	2.6549	9.5	9.4	6.8	-5.3
Manufacture of computer, electronic	1.5704	3.1	4.3	11.2	21.5
Manufacture of electrical equipment	2.9983	40.6	21.6	9.5	15.7
Manufacture of machinery and equipment	4.7653	10.4	4.6	2.8	8.0
Manufacture of motor vehicles, trailers	4.8573	-2.1	5.6	8.9	10.3
Manufacture of other transport equipment	1.7763	3.6	20.4	8.2	-5.7
Manufacture of furniture	0.1311	21.1	6.6	2.7	-19.8
Other manufacturing	0.9415	10.5	0.0	-6.4	-2.2
MINING	14.3725	2.7	4.4	1.6	0.4
MANUFACTURING	77.6332	3.7	5.8	2.8	3.0
ELECTRICITY	7.9943	6.2	2.4	3.6	6.3
OVERALL IIP	100.0000	3.7	5.2	2.7	3.0

Data Source: MOSPI

Let us first look at the positive drivers of IIP growth. The positive thrust came largely from sectors like Tobacco, Computers & Electronics, electrical equipment, motor vehicles, non-metallic minerals, machinery & equipment, basic metals, textiles, and wood products.

The negative pressure on IIP is coming from sectors like furniture, recorded media, leather products, food products, paper products, other transport equipment, pharmaceuticals, and chemicals. Like we said last time, Trump tariff uncertainty resulted in trade pressure shifting back from domestic demand to weak export demand. At least, Indian manufacturing is now surely moving up the value chain.

HOW DOES FULL YEAR FY25 DATA LOOK?

With March 2025 IIP data announced, we have the full fiscal data for FY25. IIP growth of 4.0% for FY25 is progressively lower compared to; FY22 (11.4%), FY23 (5.2%), and FY24 (5.9%). This is partially due to base effect, and partially due to slowdown in government capex spending. For FY25, positive drivers were electrical equipment, furniture, transport equipment, computer electronics, and basic metals. The negative drivers for FY25 were Printing & recorded media, leather products, food products, paper products, and pharmaceuticals. Clearly, merchandise exports were the pressure point in FY25!