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Below the Perspective on IIP announcement by Mr. Arsh Mogre, Economist - Institutional Equities, PL Capital 

India’s industrial output growth slowed to 3.2% YoY in December 2024, marking the weakest pace in four months and missing expectations of 3.9%. The sharp deceleration from 5.2% in November underscores the ongoing loss of industrial momentum, with manufacturing growth slipping to 3.0% (vs. 5.5%) and demand-side indicators showing mixed trends.Consumer demand remains a key pressure point. Consumer durables output grew 8.3%, but non-durables collapsed by -7.6%, the worst drop in months, reflecting a fragile urban consumption backdrop. This aligns with the lagged impact of past monetary tightening and weak job growth, which continue to weigh on household spending.

While capital goods growth surged 10.3%, signaling investment-led resilience, the overall industrial recovery remains uneven. Export-oriented sectors face heightened risks, with Trump’s aggressive tariff stance on steel and aluminum fueling global trade uncertainty. The response from trading partners—whether through negotiations or retaliatory tariffs—will be crucial in determining the net impact on India’s external-facing industries, particularly in manufacturing.The broader IIP trend remains concerning. Growth for April-December moderated to 4.0%, down sharply from 6.2% a year ago. Urban demand constrained, global trade at risk, and manufacturing momentum weakening are weighing on industrial activity. However, government spending particularly on capital expenditure is also likely to see a rapid uptick over the next few months and the impact of domestic stimulus will be visible. On the slightly longer horizon, new government policies may support manufacturing investments in the coming quarters that will translate to higher IIP growth over the next few year

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