Summary

India’s industrial production growth experienced a notable slowdown in April 2024, with the Index of Industrial Production (IIP) rising by only 1.2%, marking the lowest growth rate in five months and falling short of market expectations. This decline followed a period of fluctuating industrial performance characterized by a peak growth of 19.6% in May 2022 and subsequent volatility in 2023 and early 2024. The manufacturing sector, which accounts for over three-fourths of the IIP, was a key contributor to the slowdown, growing at a subdued pace of 2.6% in April 2024, while the power sector contracted slightly, despite resilience in mining and selective manufacturing sub-sectors.
The slowdown reflects a confluence of factors, including election-related uncertainties in India and major global economies, inflationary pressures dampening consumer demand, structural challenges in infrastructure and labor, and ongoing disruptions in global trade exacerbated by heightened tariff barriers. Despite government efforts through production-linked incentives and regulatory reforms aimed at boosting manufacturing and investment, growth remains uneven across sectors such as textiles, advanced chemistry cells, and automobiles, while capital goods and construction-related industries show relative strength.
This deceleration has raised concerns about employment, industrial competitiveness, and the sustainability of India’s industrial growth trajectory, especially given the manufacturing sector’s dominant role in economic output and employment. Analysts emphasize that while the slowdown is partly a medium-term adjustment against a high base of the previous year, it underscores the need for targeted policy interventions to address supply chain bottlenecks, regulatory hurdles, and regional disparities to sustain momentum.
Overall, the April 2024 industrial output figures highlight the complexities of India’s evolving industrial landscape within a broader economic context shaped by historic reforms, sectoral shifts, and global uncertainties. Continued government focus on infrastructure development, innovation incentives, and trade policy clarity will be critical to reviving robust and inclusive industrial growth.

Background

India’s industrial production has experienced notable fluctuations over recent years, reflecting broader economic trends and sectoral dynamics. In May 2022, the Index of Industrial Production (IIP) reached an all-time high growth rate of 19.6%, driven by robust activity across multiple sectors. However, this strong momentum was followed by a significant decline, with growth dropping to its lowest level in five months at 1.1% in March 2023.
Subsequently, the industrial output showed signs of recovery. By April 2023, the growth rate rose to 4.2%, and further improved to 5.2% in May 2023. This resurgence was supported by increased production in capital goods and consumer durables, indicating a healthier investment cycle within the economy. Key industries such as cement, coal, fertilizers, and electricity contributed substantially to this upswing, with the core sector registering a remarkable 18.1% growth compared to the previous year, surpassing the 8.4% growth recorded in April 2023.
Moving into 2024, industrial production continued to display moderate growth. In April 2024, output increased by 4.2%, albeit below market expectations of 5.5%, marking the lowest growth rate in five months. The manufacturing sector showed a 2.6% expansion, led by manufacturing of computer, electronic, and optical products as well as electrical equipment. Additionally, the production of basic metals and refined petroleum products contributed to the growth during this period.
Looking at the financial year 2023, India’s industrial production registered growth exceeding five percent, with expectations to reach nearly six percent in 2024. Estimates for FY25 suggest further improvement, projecting growth of around 6.2%, driven primarily by electricity and construction sectors. The Composite Purchasing Managers’ Index (PMI) also reflected positive sentiment, rising to 61.2 in May 2025, the sharpest expansion since April 2024, with strong contributions from the services sector and steady manufacturing output.
These fluctuations highlight the complex and evolving nature of India’s industrial landscape, influenced by sector-specific performance and broader economic conditions.

Detailed Analysis of April Industrial Production Growth

The industrial production growth in India for April 2023 exhibited a modest increase of 4.2% on an annual basis, improving from the previous month’s growth rate of 1.1% in March 2023. This rise, however, was still significantly lower compared to the 6.7% growth recorded in April 2022, indicating a slowdown in the industrial sector’s momentum year-on-year. Notably, March 2023 marked a five-month low in industrial growth, with only 1.1%, while the lowest growth level in the preceding year was a contraction of 4.1% recorded in October 2022.
The manufacturing sector, which constitutes more than three-fourths of the Index of Industrial Production (IIP), recorded a growth of 4.9% in April 2023, a slight dip compared to the 5.6% growth during the same period last year. This subdued manufacturing output was a critical factor restraining the overall industrial growth for April. The power generation sector experienced a decline of 1.1% in April, further contributing to the sluggish industrial performance during the month.
In contrast, the mining sector demonstrated a positive trajectory, with output rising to 6.4% in May 2023, up from 5.1% in April 2023, and preliminary fiscal year 2023 data indicates an even higher growth rate of 8.2% for the mining industry compared to the previous year. Despite the stronger mining output, the relatively weak performance of the manufacturing and power sectors exerted downward pressure on the overall IIP growth in April.
From a use-based classification perspective, the indices for primary goods, capital goods, intermediate goods, and infrastructure/construction goods stood at 149.8, 102.7, 154.1, and 174.7 respectively in May 2023, reflecting sectoral disparities in growth trends. In April, the capital goods segment experienced a slight improvement influenced by favorable base effects and government spending cycles, but intermediate, infrastructure, and construction goods witnessed a slowdown due to reductions in cement and steel production.
The core sector, which contributes significantly to industrial output, recorded a robust growth of 18.1% in May 2023, propelled by increased production in cement, coal, fertilizers, and electricity. This surge surpassed the 8.4% growth observed in April, signaling some recovery in key industrial segments that had been underperforming.

Factors Contributing to the Slowdown

The slowdown in India’s industrial production growth in April can be attributed to a combination of domestic and external factors. One significant influence was the election-driven uncertainty in both India and the United States during fiscal years 2024 to 2025. This uncertainty, coupled with unexpected disruptions caused by heavy rainfall until the third quarter and volatility in global trade networks, dampened economic momentum. Moreover, the growth figures are being compared against an unusually high economic base from the previous year, which makes the current slowdown appear more pronounced.
Inflation has also played a crucial role by eroding the purchasing power of urban consumers, thereby weakening demand and slowing growth. According to India’s central bank, inflationary pressures have suppressed consumer spending, directly impacting industrial output. Additionally, challenges within key sectors such as textiles, advanced chemistry cells, solar modules, and automobiles have contributed to slower progress, despite successful incentives like the smartphone Production-Linked Incentive (PLI) scheme, which has seen domestic phone production nearly double from 2.14 trillion to 4.1 trillion rupees between FY 2020 and FY 2024. However, an interministerial panel reported that investment growth remains significantly sluggish in textiles, IT hardware, and specialty steel sectors.
Regional disparities in industrial development further complicate the growth scenario, necessitating targeted policy interventions and business-friendly reforms to attract private sector investment. The Economic Survey 2024-25 emphasized India’s industrial strength but acknowledged persistent challenges such as global trade uncertainties, domestic supply chain bottlenecks, and regulatory burdens that restrain expansion. The industrial growth estimate for FY25 stands at 6.2%, primarily driven by electricity and construction sectors, signaling areas of relative resilience amidst the broader slowdown.
Structural challenges within the manufacturing sector also weigh on growth. India continues to face significant infrastructure deficits in transportation, energy, and communications, which impede efficient production and distribution. Furthermore, a shortage of skilled labor limits the sector’s capacity to expand and adopt new technologies, posing a persistent hurdle for manufacturing competitiveness. These factors collectively contribute to the observed moderation in manufacturing PMI figures, which dropped to 56.3 in February 2025 from 57.7 in January, marking the slowest rate of expansion since December 2023. The decline is largely attributed to moderating production and sales growth alongside reduced input purchasing activity.
Export-related uncertainties add to the headwinds faced by industrial production. Approximately 30–35% of the Index of Industrial Production (IIP) weight is attributed to exports, which have come under pressure due to reciprocal tariff hikes by the United States—the highest since World War II. This trade friction has created significant uncertainty for Indian exporters, suppressing demand and industrial output until clearer trade policies are established.
Lastly, the mining sector provided some support to IIP growth in June 2024, but manufacturing, which holds a dominant 77.63% weight in the IIP, recorded a decline in growth rates during April to June 2024 compared to the previous year. Industrial production in 2024 remained stagnant compared to levels recorded in December 2007, indicating a long-term concern over the sector’s ability to sustain robust growth.
Together, these factors—ranging from inflation and election uncertainties to structural challenges and global trade tensions—have culminated in the disappointing drop in India’s industrial production growth in April.

Sectoral Impact and Sub-sector Analysis

India’s industrial production growth experienced a significant slowdown in April 2024, with notable disparities across key sectors. The Index of Industrial Production (IIP) comprises three main sectors: Mining, Manufacturing, and Electricity, holding weights of 14.37%, 77.63%, and 7.99%, respectively. The decline in overall growth was largely driven by a contraction in the manufacturing sector, which fell by 1.3 percentage points to 3.8% for the April to June 2024 quarter compared to the same period the previous year.
Within the mining sector, however, there was a contrasting positive trend. Mining output grew by 10.3% year-on-year in June 2024, contributing significantly to the IIP growth and partly offsetting the decline in manufacturing. Earlier data from May 2023 also indicated a rise in mining output by 6.4%, improving from 5.1% in April, underscoring the sector’s resilience.
Manufacturing remains the dominant sector in India’s industrial landscape, but its growth slowdown is a cause for concern. The sector’s growth decelerated to 3.8% in the second quarter of 2024, down from 5.1% in the previous year. Despite this overall slowdown, certain sub-sectors within manufacturing showed robust performance. Production of basic metals increased by 3.5%, electrical equipment surged by 33.1%, and coke and refined petroleum products rose by 5.6% during the April-October 2024 period. This indicates uneven growth within the sector, where capital-intensive and infrastructure-related industries are leading the output.
The electricity sector, although smaller in weightage within the IIP, showed signs of marginal recovery. After a decline of 1.1% in April 2023, the sector experienced a slight growth of 0.9% in May 2023. More recent data for September 2024 reported growth rates of 0.5% in electricity production, alongside 0.2% in mining and 3.9% in manufacturing.
Use-based classification data for May 2023 further highlight the trends across product categories, with indices reported at 149.8 for Primary Goods, 102.7 for Capital Goods, 154.1 for Intermediate Goods, and 174.7 for Infrastructure/Construction Goods. Consumer durables and non-durables also showed solid indices of 115.2 and 148.0, respectively, reflecting ongoing demand in consumer segments.
These sectoral trends underscore the complexity of India’s industrial growth dynamics. While manufacturing growth slowed down, buoyed largely by a few sub-sectors, mining continued to strengthen, and the electricity sector showed tentative recovery. Policymakers are encouraged to focus on addressing sector-specific challenges such as regulatory burdens and supply chain constraints to sustain industrial growth and reduce regional disparities.

Government and Expert Responses

The government has acknowledged the recent slowdown in industrial production growth, attributing it to several temporary and external factors rather than structural weaknesses. Officials have pointed to election-driven uncertainty in both India and major global economies, such as the United States, which affected investment and manufacturing activities during the fiscal year 2024–2025. Additionally, disruptions caused by heavier-than-expected rainfall up to the third quarter and volatility in global trade networks have compounded the slowdown. The government also emphasized that the current growth figures are being compared against an elevated economic base due to revised data from previous years, making the slowdown appear more pronounced than it may be in real terms.
Experts have largely echoed these sentiments, viewing the dip in industrial production growth as a medium-term adjustment rather than a signal of long-term decline. Many analysts have highlighted that India’s ongoing structural reforms, initiated in 1991 with economic liberalization policies aimed at shifting from a Soviet-model economy to a market-driven one, continue to underpin the economy’s resilience and growth potential. These reforms have historically led to significant foreign investment inflows and a gradual transition towards a more services-oriented economy, factors that continue to support industrial growth despite short-term fluctuations.
Furthermore, industry specialists have noted that certain sectors, such as fast-moving consumer goods (FMCG), have shown robust performance, with rural markets growing at twice the rate of urban areas during the recent quarters. This suggests underlying demand strength that could help industrial output rebound in coming periods. However, caution remains as some experts call for close monitoring of global trade developments and domestic policy measures to sustain momentum and mitigate risks associated with external shocks.

Broader Economic Context

India’s industrial production and overall economic growth must be understood against a complex backdrop of historical reforms and sectoral dynamics. The economic liberalization initiated in the early 1990s was primarily a response to a balance of payments crisis in 1991, which exposed deep-seated structural weaknesses in the industrial and trade policies of the time. Contrary to popular belief that reforms were externally imposed by institutions like the IMF, the policy shifts were largely driven domestically to address these inefficiencies and stimulate competitiveness. While some argue that the economic growth witnessed post-liberalization was a delayed outcome of earlier industrial policies rather than the reforms themselves, the trajectory of industrial output since then has been influenced by a mix of policy decisions and sectoral performance.
In recent years, India’s industrial production has experienced fluctuating growth rates. For example, in April 2024, the output of non-durable consumer goods declined by 2.4% after a previous surge, while goods linked to infrastructure and construction sectors recorded modest growth of 8.0%, down from a 13.4% year-on-year expansion. The core sector—which includes key industries such as cement, coal, fertilizers, and electricity—constitutes over 40% of the Index of Industrial Production (IIP) and is regarded as a leading indicator of industrial activity. Notably, this core sector showed strong growth at times, such as an 18.1% jump in May 2023, driven by amplified production in these key industries, reflecting robust investment cycles supported by growth in capital goods and consumer durables.
The structural shift of the Indian economy towards services has been marked by the services sector’s share rising to 57.03%, alongside an increase in the industry

Implications of the Decline

The recent decline in India’s industrial production growth, particularly the disappointing drop to 1.2% in April, carries several significant implications for the economy. Firstly, the contraction in major manufacturing sectors such as food products and tobacco reflects deeper structural challenges within industrial production despite an overall increase indicated by broader IIP data. This slowdown may signal emerging weaknesses in key segments that traditionally contribute substantially to employment and economic output.
One immediate implication is the potential strain on employment, especially in small industries, where inefficiencies and outdated skill sets could hinder productivity. There is a growing need for workers to upgrade their abilities and embrace new technologies to maintain competitiveness and support economic expansion. Failure to do so might exacerbate resource constraints and reduce the resilience of smaller firms in a volatile global environment.
Moreover, the slowdown must be understood in the context of broader macroeconomic and geopolitical factors. The fiscal year 2024–25 has been marked by election-driven uncertainty in both India and major global economies such as the United States, along with disruptions caused by higher-than-expected rainfall and volatility in international trade networks. These factors compound the challenges faced by domestic industries, complicating recovery efforts despite supportive industrial policies and ongoing reforms aimed at enhancing global competitiveness.
The decline also underscores the importance of sustaining and strengthening domestic industrial policies. While liberalization since 1991 has historically spurred growth, recent setbacks highlight that policy adjustments are necessary to address regional disparities, regulatory burdens, and supply chain issues. Strengthening sectors like electricity and construction, which showed promising growth, alongside capital goods and consumer durables, could help revive industrial production and investment cycles.

Measures and Strategies to Address the Slowdown

To counter the recent slowdown in industrial production growth, the Indian government and policymakers have implemented a variety of measures and strategies aimed at revitalizing key sectors and boosting overall economic performance. A significant focus has been placed on strengthening domestic industrial policies to improve global competitiveness amidst ongoing global manufacturing shifts, supply chain disruptions, and trade uncertainties.
One of the strategic approaches involves bolstering manufacturing capabilities through targeted production-linked incentive (PLI) schemes. For example, the smartphone PLI scheme has successfully increased domestic phone production from 2.14 trillion rupees in FY 2020 to 4.1 trillion rupees in FY 2024. However, progress in other critical sectors such as textiles, advanced chemistry cells, solar modules, and automobiles has been comparatively slow, prompting the government to assess and recalibrate these initiatives to accelerate investment and growth.
Further reforms are also aimed at liberalizing reserved sectors and streamlining regulations. Since the 1991 economic reforms, India has been progressively reducing sectors reserved for government control to just three, thereby promoting greater private sector participation and market-driven growth. This ongoing liberalization, although initially triggered by external pressures, has evolved into a domestically driven agenda to transform India into a competitive market economy.
Infrastructure development and MSME support have also been prioritized as critical enablers of industrial growth. Efforts to improve supply chain resilience and enhance infrastructure connectivity are designed to address bottlenecks and facilitate smoother production and distribution processes. Additionally, the government is working to stimulate demand through increased public spending, especially post-election periods, to counteract temporary lulls caused by election-related uncertainties and external shocks.