June industrial growth falls to 10-month low of 1.5%
India’s industrial growth slowed sharply in June 2025, with the Index of Industrial Production (IIP) rising just 1.5% year-on-year. This marks the lowest growth rate since August 2024, as per data released by the National Statistical Office (NSO).
The slowdown comes after a revised growth of 1.9% in May, indicating a loss of momentum in the economy.
🏭 Manufacturing Shows Growth, But It’s Not Enough
Manufacturing was the only major sector that showed a positive trend. It grew by 3.9% in June, slightly better than 3.2% in May. Sectors like automobiles, basic metals, and pharmaceuticals supported this growth.
However, this gain wasn’t enough to lift overall industrial output. That’s because mining and electricity production recorded sharp declines during the same period.
⛏️ Mining and Electricity Pull Down Overall Growth
The mining sector contracted by 8.7%, a significant fall compared to the previous month. Heavy monsoon rains in key mining areas were a major reason behind the drop.
The electricity sector shrank by 2.6%, continuing its decline from May when it fell by 4.7%. Reduced demand for power and supply issues added to the slump.
📊 Q1 Industrial Growth at Three-Year Low
Industrial output for April to June 2025 averaged just 2.0%, the weakest in nearly three years. This is far below the 5.4% growth seen in the same quarter last year.
The slowdown indicates rising economic concerns and pressure on the industrial sector. Analysts believe it may affect broader GDP growth if the trend continues.
📦 Capital Goods and Non-Durables See Sluggish Demand
Within the use-based classification, capital goods saw growth fall sharply—from 13.3% in May to 3.5% in June. This signals weaker business investment.
Consumer non-durable goods also contracted, reflecting reduced rural demand. On the other hand, consumer durables and intermediate goods managed moderate growth.
🌧️ Seasonal Rains Add to Industrial Challenges
Experts attribute part of the decline to seasonal disruptions. Heavy rainfall in late June affected mining operations and led to power outages. These disruptions weighed heavily on output.
“The weak IIP growth is a mix of weather-related issues and low base effects,” said an ICRA economist. “Manufacturing held steady, but other sectors dragged the index down.”
🌍 Global Weakness and Investment Gaps Continue
Global demand for Indian exports remains low. This affects industries like textiles, electronics, and machinery.
At the same time, private sector investment remains muted. High input costs, policy uncertainties, and slow capex disbursal are holding back new industrial projects.
🏛️ Government Optimism and Policy Push
The government said it expects a recovery in coming months. “Disruptions due to monsoon and global trends impacted June. But steps like PLI schemes and rural spending will support growth,” a Commerce Ministry official noted.
The Production-Linked Incentive (PLI) schemes, especially in electronics and renewable energy, may offer support in the medium term.
🔮 What Lies Ahead? A Cautious Outlook
While some recovery is expected in July and August, experts advise caution. “The June slowdown isn’t just weather-related—it reflects weak demand and global pressures,” an SBI economist warned.
The Reserve Bank of India may watch these numbers closely. However, any shift in policy would likely depend on inflation trends and investment activity.
🧾 Conclusion
India’s industrial sector is facing renewed stress, with June’s 1.5% growth highlighting deep-rooted challenges. While manufacturing offers some hope, sharp declines in mining and electricity suggest an uneven recovery.
The months ahead will be crucial. Sustained policy support and improved demand—both domestic and global—will be key to reviving industrial momentum.
