Perspective on IIP data by Arsh Mogre, Economist, PL Capital
Below the Perspective on IIP data by Arsh Mogre, Economist, PL Capital based
“India’s April 2025 IIP print at up 2.7% YoY against consensus of 1% YoY signals that the economy’s supply side remains on an investment-led trajectory. Sectorally, manufacturing powered the headline with 3.4% growth, offsetting a –0.2% slip in mining and a modest 1.1% rise in electricity, the latter clipped by the April heatwave that lifted maintenance outages at thermal plants.
Inside manufacturing, the expansion was strikingly concentrated. Three heavyweights —basic metals (+4.9%), motor vehicles (+15.4%) and machinery & equipment (+17.0%)—account for barely a quarter of manufacturing weight yet delivered roughly four-fifths of the headline increase, with 16 of 23 industry groups in positive territory. The breadth index implicit in the release fell to its lowest since August 2024, confirming a narrow but forceful capex spine rather than a broad-based factory revival.
Capital-goods output surged 20.3 % y/y to 114.3, the strongest single-month jump since mid-2021, mirroring front-loaded public-sector orders and last-mile private spending ahead of the FY26 sunset for the first PLI cohort. Intermediate goods grew 4.1%, while infrastructure-linked production climbed 4.0%, both consistent with the project-execution phase of the capex cycle. In stark contrast, primary goods slipped –0.4%, consumer durables eked out 6.4%, and non-durables fell –1.7%, their third contraction in four months.
Capacity utilisation is running above its 10-year mean, project financing flows are tilted toward fixed-asset creation, and external commercial-borrowing registrations are dominated by capex-linked raisings—all of which keep machinery and metal demand humming.
Sequentially, the General Index advanced just 0.3 pt over March after a 6.3-pt jump the previous month, pulling the three-month annualised momentum down to roughly 1½%. By comparison, capital goods added nearly 15 pt month-on-month, underscoring how the investment accelerator is masking softness elsewhere.
Looking ahead, the IIP is likely to oscillate in a 2–4 % y/y range through Q2 FY26. Capex-centric industries should remain in double-digit territory as ministries front-load spending before the October automobile-emission reset and as firms race to qualify under PLI, but headline gains will stay capped unless (i) mining normalises post-maintenance shutdowns and (ii) a timely monsoon revives rural staples. Until those two cylinders fire, India’s industrial engine will continue to idle on a potent yet narrow investment thrust rather than a broad consumption-production flywheel.”
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