India’s factory output growth expanded 4.9% year-on-year (y-o-y) in April, aided by manufacturing-sector growth accelerating to 6.2%, according to official data released on Monday. This suggests the adverse impact of the West Asia crisis was contained at least until the first month of the current fiscal year.
According to the first set of Index of Industrial Production (IIP) data, using 2022-23 as the base year released by the Ministry of Statistics and Programme Implementation (MoSPI), the index grew 5.7% in April last year, and 3.2% in March this year.
The manufacturing sector has highest weight in the index at 76%. According to MoSPI, the output of electricity and gas supply (weight 10.9%) grew 4.9% in April, while water supply, sewerage and waste management (weight 2.02%) grew 6.4%. The mining & quarrying sector (weight 11.1%), however, contracted by 5.1%.
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Among the three item groups in the mining & quarrying sector, only metallic minerals including rare earth minerals recorded a growth of 12.3%, while the other two – fuel minerals and non-metallic minerals including minor minerals — contracted by 5.7% and 14.2% Y-o-Y respectively. The electricity generation recorded a growth of 5.9% — 18% from renewable sources and 2.8% from non-renewable sources.
Energy Paradox
Aditi Nayar, Chief Economist at Icra, said the growth in three of the four sub-segments allayed the fear of an immediate negative impact from the West Asia crisis. However, the sharp contraction of 11.2% in gas supply reflects the impact of the crisis.
Rajani Sinha, Chief Economist, CareEdge, said: “A sustained contraction in the mining & quarrying sector for the fourth month in a row capped the growth in the overall index. In terms of the use-based classification, production of capital and infrastructure/construction goods continued to grow healthily by 16% and 7.1%, respectively in April. It remains encouraging to see the capital goods output record sustained double-digit growth for the sixth successive month.”
Use-Based Traction
Within the Manufacturing sector, 17 out of 23 industry groups recorded positive growth in April, MoSPI said, adding that the top three positive contributors were motor vehicles, trailers and semi-trailers (12.7%), electrical equipment (19.2%) and machinery and equipment (12.9%). “In the industry group manufacture of motor vehicles, trailers and semi-trailers, item groups auto components, spares and accessories, passenger cars, and rim (Wheel) have shown significant contribution to growth,” MoSPI said.
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The performance of the use-based segment also reflected strong growth barring primary goods, which grew just 0.8%. Intermediate goods posted 7.7% growth, consumer durables 4.3%, and consumer non-durables 2.8%.
Megha Arora, Director, India Ratings and Research, said notwithstanding higher crude prices and their pass-through to consumers from mid-May, Ind-Ra expects IIP growth to improve to 5.5% in May 2026 as the base effect will help maintain the growth momentum.
“Government’s continued capex is likely to keep the growth momentum for capital goods and infrastructure/construction goods in FY27 as well, while electricity generation is expected to further accelerate in May due to increased demand amidst high summer temperatures (power demand grew 11.5% in May 2026),” Arora said.
TOPICSindustryThis article was first uploaded on June one, twenty twenty-six, at twenty-three minutes past eleven in the night. © The Indian Express (P) Ltd