India’s Industrial Growth Slows To 1.2% In May; Capital Goods Surge Over 14%

The manufacturing sector, a major provider of employment for India’s growing educated workforce, grew by 2.6 per cent compared to the same period last year

A bright spot in the data was the 14.6 per cent surge in capital goods production, which indicates strong investment activity across industries

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India's industrial output, as measured by the Index of Industrial Production (IIP), saw a moderate growth of 1.2 per cent in May 2025, according to the latest data from the Ministry of Statistics and Programme Implementation (MoSPI) released on Monday. While the overall figure reflects a slowdown, specific sectors like manufacturing and capital goods production displayed encouraging signs.

The manufacturing sector, a major provider of employment for India’s growing educated workforce, grew by 2.6 per cent compared to the same period last year. Out of the 23 manufacturing industry groups, 13 recorded positive growth in May, suggesting some resilience within the sector despite broader industrial challenges.

Among the top performers:

• Manufacture of basic metals rose 6.4 per cent, led by increased output of items such as MS blooms, billets, slabs, and flat products of alloy steel.
• Manufacture of machinery and equipment expanded 11.8 per cent, with notable gains in centrifugal separators, pumps, and stationary internal combustion engines.
• Manufacture of other non-metallic mineral products increased 6.9 per cent, thanks to strong demand for cement and glassware.

Mining And Electricity Output Drag Down Growth

On the downside, mining sector output dipped slightly by 0.1 per cent, while the power sector contracted sharply by 5.8 per cent. The drop in electricity generation significantly impacted the overall industrial performance, highlighting ongoing challenges in the energy space.

Capital Goods And Infrastructure Shine

A bright spot in the data was the 14.6 per cent surge in capital goods production, which indicates strong investment activity across industries. This category, often considered a bellwether for future industrial expansion, suggests that companies are ramping up capacity and infrastructure.

Meanwhile, infrastructure and construction goods registered a solid 6.3 per cent growth, supported by sustained government spending on transport and logistics-related projects, particularly in highways, ports, and railways.