Industrial output moderates to 2.7% in April, slowest in eight months

New Delhi: Industrial production grew at 2.7% in April, its slowest pace in eight months, as mining output contracted and power generation grew at a slower pace over a high base, official data showed.

The modest expansion of factory output, compared with a 5.2% expansion in the year-ago period, signals the challenges facing the economy.

In the last financial year, factory output saw sharp fluctuations, expanding 6.3% in May and remaining stagnant in August. In February 2025, output growth was marginally faster than the level now reported for April, data from the ministry of statistics and programme implementation showed.

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Factory output growth for March 2025 has now been revised up from 3% reported in April to 3.9%, the ministry said.

In April, mining output contracted marginally from a high base, while manufacturing expanded 3.4% and electricity output grew 1.1% annually.

Manufacturing holds up

Within manufacturing sector, machinery and equipment saw a 17% jump, while motor vehicles expanded 15.4%.

“India’s industrial production growth moderated to 2.7% in April 2025, reflecting the broader global economic headwinds and geopolitical uncertainties that are beginning to weigh on domestic manufacturing momentum," said Rishi Shah, Partner and Economic Advisory Services Leader, Grant Thornton Bharat.

"While the headline number shows resilience with manufacturing leading at 3.4% growth, the sequential deceleration from March’s 3.0% and the mixed sectoral performance—particularly the decline in mining and consumer non-durables—suggests some cautioniswarranted,” said Shah.

Data showed that consumer non-durables such as packaged food, toiletries and clothing saw a 1.7% output contraction in April. Consumer non-durable output had witnessed contracted seven months in the last financial year, leading to an annual contraction of 2.5%.

On the other hand, output of consumer durables such as washing machines and air conditioners, often linked to urban demand, witnessed a 6.4% growth in April.

The contraction in consumer non-durable goods is likely to draw the attention of policy makers given that it gives a nuanced view of the consumption trend. Overall GST collections in April, a tax on consumption, was the highest so far at ₹2.37 trillion.

Capital goods output, in the meantime, showed a 20.3% expansion in April, indicating brisk investment activity.

Analysts said lower-than normal temperatures in May are responsible for the decline in daily power generation, with a likely contraction in electricity output in the current month, for which data is expected on 30 June.

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“The unseasonal rains could also impact the construction goods output. This along with an unfavourable base effect would keep the factory output growth under 2% year-on-year in May 2025,” India Ratings and Research said in an analysis shared on Wednesday.

The finance ministry’s monthly economic review for April 2025 had earlier this week pointed out that several global agencies have projected India’s economic growth to be in the range of 6.3 – 6.7% in FY26, supported by robust domestic fundamentals, stable macroeconomic management, and growing government capital expenditure, while declining inflation strengthens this outlook.

The review had also pointed out that a successful US-India trade agreement could flip current headwinds into tailwinds, opening up new market access and energising exports.