India's industrial output, measured by the Index of Industrial Production (IIP), rose to 5.1% in May 2025, up from a revised 4.9% in April, according to data released by the Ministry of Statistics and Programme Implementation. This marks the third consecutive month of expansion above the 5% threshold, signaling sustained momentum in the manufacturing sector.
Manufacturing, which accounts for nearly 78% of the IIP weight, grew by an estimated 5.3% in May, up from 5.0% in April. Key drivers included robust performance in automobiles, basic metals, and pharmaceuticals. The mining sector recorded a 4.2% growth, while electricity generation expanded by 6.1%, reflecting higher demand from both industrial and residential consumers amid a warmer-than-usual pre-monsoon season.
The cumulative IIP for the first two months of the fiscal year (April–May) stood at 5.1%, compared to 4.1% in the previous corresponding period, indicating a broad-based improvement across manufacturing, mining, and electricity. The data aligns with other high-frequency indicators such as the Purchasing Managers' Index (PMI) for manufacturing, which remained in expansion at 58.5 in May, pointing to strong order books and rising production volumes.
Government capital expenditure, particularly in infrastructure and defense, has provided steady demand for core sectors like cement, steel, and heavy machinery. The Production Linked Incentive (PLI) schemes covering 14 key sectors have attracted investments exceeding ₹1.2 lakh crore, further supporting industrial output.
The Reserve Bank of India (RBI) kept the repo rate unchanged at 6.50% in its June monetary policy review, maintaining a cautious stance while monitoring sticky core inflation around 4.5%. Analysts caution that global demand slowdown, especially from the EU and US, and persistent input cost pressures pose risks to the growth trajectory.
