India's Manufacturing Momentum Powers January Surge in Industrial Growth

India's industrial activity surged in January 2025, driven by robust manufacturing growth and increased government spending. The Index of Industrial Production grew by 5.0% year-on-year. While some sectors moderated in February, domestic growth is expected to continue, supported by policy incentives and resilient demand.

In January 2025, India's industrial activity experienced a noteworthy increase, largely attributed to the manufacturing sector, as indicated by a report from ICICI Bank Global Markets. Among 23 manufacturing industries, 19 demonstrated positive momentum, an improvement from the previous month's 16. Additionally, elevated government expenditure provided further impetus to industrial expansion, suggesting a favorable outlook for meeting budget targets.

The higher government spending was instrumental in bolstering industrial growth, maintaining a positive outlook for achieving budgetary goals, supported by steadfast rural demand and non-oil exports. Although February saw a slight moderation in industrial activity due to diminished automobile and fuel sales, sectors like electricity demand and travel have witnessed an increase.

Looking forward, domestic growth is expected to accelerate, aided by tax incentives for urban India announced in the Budget and potential policy easing by the Reserve Bank of India (RBI). However, external threats, such as global tariff uncertainties, pose potential risks to India's export sector. January 2025 saw significant industrial growth, driven by robust manufacturing, with the Index of Industrial Production (IIP) expanding by 5.0% year-on-year, up from 3.5% in December 2024.

Specifically, petroleum products, the largest manufacturing component, saw an 8.5% year-on-year increase in January, up from December's 3.9%. Other significant industries reported strong growth as well: electrical equipment rose by 21.7% year-on-year, fabricated metals by 10.5%, and basic metals by 6.3%.

Growth was supported by strong results in capital goods, infrastructure, and durable goods. Capital goods saw a year-on-year growth of 7.8%, while infrastructure and construction goods expanded by 7.0%, and consumer durables increased by 7.2%. Primary goods recorded their highest growth in six months, at 5.5% year-on-year, with cement production notably increasing by 14.5%. Consumer non-durables made a recovery from a December 2024 low of -7.6% year-on-year to -0.2% in January 2025 due largely to increased tobacco production.

Electricity production remained subdued at 2.4% year-on-year in January, down from 6.2% in December, although early indicators suggest an improvement in February. Mining output rose by 4.4% year-on-year compared to December's 2.7%, contributing to the overall positive momentum. (ANI)

(With inputs from agencies.)