The production volume of eight core industries, boosted by strong performance in the cement and refinery product sector, rose 4.6% in January 2025, exceeding the 4.2% growth recorded in January 2024.
Cement sector production grew to 14.5% (the fastest pace in 15 months) behind the government’s sustained pickup on equipment, while refinery products rose 8.3% (the fastest since November 2023).
The Ministry of Commercial and Industry has also increased the growth of its core industry to 4.8% in December 2024 from the interim level of 4% announced last month.
This December 2024 printing change was primarily due to a sudden upward revision of cement growth (4 to 4.6 percent), steel (5.1 to 7.3 percent), and electricity (5.1 to 6.2 percent).
During the April-January 2025 period, the core industry’s growth was 4.4%, falling sharply to the 7.8% growth recorded at the same time last year.
Meanwhile, six of the eight core industries recorded positive growth in the month under review. The two sectors that saw contraction were crude oil (-1.1%) and natural gas (-1.5%).
Growth driver
The sectors that showed positive growth in January 2025 are coal (4.6%), refinery products (8.3%), fertilizer (3%), cement (14.5%), steel (3.7%) and electricity (1.3%).
The eight core industries of coal, natural gas, crude oil, refinery products, fertilizer, cement, iron and electricity account for 40.27% of the weight of items contained in the Industrial Production Index (IIP).
Commenting on the latest core sector performance, DK Srivastava, EY India’s Chief Policy Advisor, said there will be a slowdown in coal, iron, cement and electricity production growth from April 2024 to January 2025.
“This data confirms the message coming from national account data released today by the NSO. This shows that the biggest drop in the GVA sector comes from the manufacturing sector, which has grown from 12.3% in 2023-24 to 4.3% in 2024-55,” he added.
Madhan Subnavis, chief economist at Baroda Bank, said the performance of the core sector in January was largely driven by the basic effects.
He said cement growth was high at 14.5%, more than 4.1% last year, so the real estate and roads sector is in good demand. Sabnavis said that electricity growth was thwarted by the low level of business activity.
Fertilizer production was muted at -0.6% or more at 3% as demand was low due to the completion of rabbinic sowing and is a lulling season. Demand is usually for non-farms, he said.
Crude oil production
Supply issues and increased imports have led to a decline in crude oil and natural gas production. “IIP growth is expected to range from 4-5% based on this growth rate,” Subnavis added.
Palas Jasraj, senior economic analyst for India’s assessment and research, said moderation in coal, electricity and steel reduced the growth of the core sector in January. Coal and power output growth at 4.6 and 1.3 percent was the lowest since September 2024.
“With the high basic effect of February 2024: 7.1% year-on-year), Ind-Ra expects core sector production growth to only 3.5% year-on-year in February 2025,” Jasraj added.
