Industrial Production India

Industrial production growth slowed down for the second consecutive month in October 2017.

Published monthly by Ministry of Statistics and Programme Implementation(MOSPI). Updated until the month of October 2017.(Published on December 12th, 2017)

Recent Data Trend

Growth in industrial production of India decelerated for the second straight month to 2.2% YoY in October 2017, falling below market expectations. The revised figures reveal that production grew by 4.1% YoY in September 2017. On a cumulative basis in the April-October period, industrial production grew only by 2.5% YoY as compared to 5.6% growth in the same period a year ago. This indicates a muted growth trend in the first half of FY 18.

The fall in the growth rate in October was mainly caused by the slowdown in the manufacturing sector which contributes about 78% to the total industrial production. The manufacturing sector grew by a mere 2.5% YoY in October, the lowest growth rate since May 2017. Growth in mining sharply declined to 0.2% YoY from 7.8% in September 2017, mainly due to contraction in production of crude oil. A fall in the growth rate of natural gas to 2.8% YoY and coal to 3.9% YoY further added to the downside pressure. Coal India, which accounts for 80% of total coal production in India, was able to produce only 93% of its targeted production in October 2017, i.e. 46.14 million tonnes. Electricity production growth also marginally declined to 3.2% YoY, from 3.4% YoY in September.

According to the use-based classification, the growth of primary goods fell to 2.5% YoY from 6.5% YoY in the last month. The growth in capital goods manufacturing, a leading indicator of the investment situation of the country, was 6.8% YoY, a reduction from the 8.2% growth rate in the previous month. The notable point is that production of consumer durables has been on a contractionary path since December 2016, expanding only twice in May and August 2017 respectively. In October, consumer durables fell by 6.9% YoY, reflecting a contraction in demand. The slow growth rate of private consumption in the July-September quarter conforms to this decline. Private consumption grew by 6.5% YoY in July-September 2017, lowest since October-December 2015.

The contraction in credit, cash crunch in 2016 and the new tax regime introduced in July 2017 has been taking a heavy toll on industries like paper and paper products, chemical products and textile industry.

The GVA figures of the July-September quarter has given some hope though. The rebound to 6.1% YoY growth in GVA was led by the industry sector, which grew by 5.78% YoY as compared to 1.61% YoY in the April-June quarter. The manufacturing sector grew by 6.97% YoY in the second quarter of 2017. The current bank recapitalization plans and the new amendments to the Insolvency and Bankruptcy code (IBC) by the government are expected to revive the genuinely distressed companies of their burden and restart stalled projects. The influx of Rs. 2.1 trillion will help spur the investment-production cycle, which has been slowing down since late last year.

Brief Overview

Index of Industrial production is published by the Ministry of Statistics and Programme Implementation every month. The current base year of the index is 2011-12=100. The index shows the changes in the production volume of different industrial commodities. The sub-components of IIP are- Mining, Manufacturing, and Electricity. The IIP is also classified according to its use namely, Primary Goods, Capital Goods, and Intermediate Goods. It is an important measure of growth as it records the level of industrial activity of the economy.

For more information visit the official government website

IIP- Use based classification

Next release date:  January 12th, 2018

Industrial Production-Quarterly