May 2025 IIP falls to 1.23%; electricity output dips sharply

1 Jul 2025 , 11:11 AM

MAY 2025 IIP AT 1.2%; POWER AND MANUFACTURING PLUMMET

IIP growth fell from 2.57% in April to 1.23% in May 2025. Incidentally, the April IIP has been revised lower by 13 bps from 2.70% to 2.57%. This is the third month when the IIP has been reported in the subsequent month. About revisions, IIP growth for April was revised down 13 bps from 2.70% to 2.57%. However, final revision for Feb-25 saw no change.

In terms of yoy IIP, mining was almost flat, albeit in contraction mode. Manufacturing IIP has fallen progressively between March and May 2025 from 4.0% to 2.6%, while electricity IIP has dipped sharply from 7.5% to -5.8% in the same period. Clearly, the lower capex outlays by private sector appears to be impacting the IIP growth.

High frequency MOM IIP showed a revival, across the board. For May 2025, the MOM mining output expanded +4.3%, manufacturing expanded +3.5%, while electricity showed marginal expansion of +0.1%. As a result, overall IIP also expanded by +3.2% MOM; displaying a revival of confidence in the domestic economy, even amidst global concerns.

IIP GROWTH STORY IN LAST 1 YEAR

Despite being positive post August 2024, IIP has become very volatile of late.

Month	IIP Growth (%)
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	3.94%
Apr-25	2.57%
May-25	1.23%

Data Source: MOSPI

The fall in IIP in May 2025 appears to be partially influenced by the base effect. Between April and May 2024, the IIP had surged from 5.19% to 6.25%, which partially explains the fall in IIP in May 2025. If you look at IIP growth in previous 6 months, it averaged 3.9%, while it also averaged 3.9% in the 6 months prior to that. At a broad level, the median IIP appears to be converging around the 4.0% level; although current levels are much lower.

MAY 2025 IIP: DISSECTING IIP PRODUCT BASKET

The table captures comparative IIP growth for last 3 months, with respective components.

Product Basket	Weights	Mar-25	Apr-25	May-25
Manufacture of food products	5.3025	-7.6	1.1	1.8
Manufacture of beverages	1.0354	7.4	-1.5	-4.0
Manufacture of tobacco products	0.7985	23.8	23.9	4.1
Manufacture of textiles	3.2913	5.7	0.4	-2.7
Manufacture of wearing apparel	1.3225	1.3	8.7	2.4
Manufacture of leather products	0.5021	-7.4	-1.0	-4.9
Manufacture of wood products	0.1930	5.2	24.6	2.1
Manufacture of paper products	0.8724	-5.8	-2.5	-4.1
Printing and recorded media	0.6798	-10.3	-8.3	-16.3
Manufacture of coke and refined petroleum	11.7749	2.5	-2.1	1.1
Manufacture of chemical products	7.8730	-1.9	-4.1	-4.8
Manufacture of pharmaceuticals	4.9810	-4.3	-5.3	-3.1
Manufacture of rubber and plastics	2.4222	2.2	7.4	10.0
Manufacture of other non-metallic minerals	4.0853	8.9	5.4	6.9
Manufacture of basic metals	12.8043	8.7	6.8	6.4
Manufacture of fabricated metal products	2.6549	-4.0	10.7	0.8
Manufacture of computer, electronic	1.5704	22.6	10.6	-3.4
Manufacture of electrical equipment	2.9983	16.1	14.0	7.6
Manufacture of machinery and equipment	4.7653	8.9	9.5	11.8
Manufacture of motor vehicles, trailers	4.8573	11.3	16.0	6.3
Manufacture of other transport equipment	1.7763	-6.0	-0.8	6.3
Manufacture of furniture	0.1311	-19.2	1.3	-6.0
Other manufacturing	0.9415	-2.0	-20.0	-16.3
MINING	14.3725	1.2	-0.2	-0.1
MANUFACTURING	77.6332	4.0	3.1	2.6
ELECTRICITY	7.9943	7.5	1.7	-5.8
OVERALL IIP	100.0000	3.9	2.6	1.2

Data Source: MOSPI

Let us first look at the positive drivers of IIP growth. The positive thrust came largely from sectors like Machinery & Equipment, Rubber & Plastics, Electrical Equipment, Non-metallic minerals, basic metals, motor vehicles, and transport equipment. These 7 sectors averaged 7.9% IIP growth in May 2025.

The negative pressure on IIP came from Other Manufacturing, Printing & Recorded Media, Furniture, leather products, Chemicals, paper, and beverages. These 7 baskets averaged -8.1% in May 2025. Once again, it looks like the pressure is coming largely from the sectors that are dependent on exports, export logistics, and global trade routes. Reciprocal tariffs too remain a concern!