Perspective by Arsh Mogre, Economist, PL Capital based on IIP data

 By-Arsh Mogre, Economist, PL Capital based on IIP data

“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.”