IIP ended FY25 on a muted note, with growth in the index improving a tad to 3.0%YoY in Mar-25 compared to 2.9% in Feb-25.
Download ReportQuantEco Research || Mar-25 IIP - A muted end to the fiscal year
A muted IIP growth for Mar-25 defied our expectations of a relatively stronger performance, given that the month typically enjoys fiscal year end seasonality. We were also expecting some selective support from bunching up of production/exports ahead of tariff announcements in Apr-25, which did not materialize at the headline level. In comparison to some of the other high frequency indicators, IIP performance in fact trailed in Mar-25, especially compared to traction seen in E-way bills registrations, PMI manufacturing, cement production, steel consumption to highlight a few. For the year, IIP growth averaged at 4.0% compared to 5.9% in FY24. The moderation was broad-based across both sectoral and use-based classifications, except for consumer durables that posted a strong recovery.
Going into FY26, industrial activity is likely to face counteracting forces. On the positive side, domestic factors such as reduction in personal income taxes, a deeper rate cut cycle, regulatory easing, an above normal monsoon and continued focus on government capex, are likely to prove supportive. At the other end, the highly uncertain global geoeconomic environment, could adversely affect global trade, which in turn could drag global and domestic economic growth.