Industrial Growth Needs Depth, Not Just Data Recovery
The latest industrial production figures for September 2025 offer a mixed narrative — one of tentative optimism tempered by structural fragilities. The Index of Industrial Production (IIP) data, when read across longer timeframes such as the second quarter (Q2) and the first half of FY2025–26, paints a picture of a manufacturing recovery that is shallow rather than strong, and one that could falter without policy attention.
At 3%, industrial growth in the April–September 2025 period has been the slowest half-yearly expansion in at least five years, a concerning figure for an economy aiming for sustained high growth. The quarterly improvement — from 2% in Q1 to 4.1% in Q2 — suggests a mild revival in momentum, but not enough to offset the drag from weak consumption and uneven sectoral performance.
The Manufacturing Mirage
The manufacturing sector, which accounts for nearly 78% of India’s IIP, appears to have been the brightest spot in recent data. Growth in September stood at 4.8%, the second highest in this financial year, and the July–September quarter registered a relatively strong 4.9%, the fastest since late 2023. On paper, this signals resilience. In reality, however, the growth is far from broad-based.
Of the 23 key manufacturing sub-sectors, more than half actually contracted in the July–September quarter. The expansion was driven largely by capital-intensive industries such as basic metals, mineral products, and fabricated metal products — sectors that are less labour-dependent and therefore less effective at generating jobs. Meanwhile, labour-intensive sectors such as apparel, leather goods, rubber, and plastics all shrank during the quarter, continuing a worrisome trend.
This imbalance underlines a deeper problem. India’s industrial growth has increasingly leaned on capital-heavy industries while the very sectors that create mass employment and rural demand are stagnating. Without a concerted policy shift that incentivises small and medium manufacturing units and labour-intensive exports, the recovery risks becoming jobless and unequal.
Mining Malaise and Energy Concerns
The mining sector continues to underperform, registering contraction both in September and across the first half of the financial year. Although the monsoon has affected output, this weak performance points to broader inefficiencies. Mining’s stagnation matters not just for headline GDP but also for energy security and strategic mineral self-sufficiency, particularly as India expands renewable energy and electric mobility infrastructure.
Strengthening domestic mining capacities, streamlining environmental clearances, and ensuring sustainable extraction practices must be priorities. India’s industrial strategy cannot be insulated from its raw material base.
Consumer Weakness Persists
Perhaps the most telling signal in the IIP data is the sustained contraction in consumer non-durables, which have now declined for six consecutive quarters. This category includes both essential items — such as salt, edible oils, and packaged food — and discretionary goods like toiletries and household items. Persistent weakness here indicates that rural demand remains sluggish, and that household purchasing power has yet to recover meaningfully despite headline GDP growth.
While part of this may stem from a base effect, the prolonged contraction underscores a structural issue — inadequate income growth and low-quality employment. Without stronger wage growth and job creation, particularly outside the formal sector, consumer demand will remain a drag on industrial revival.
Policy Priorities: From Numbers to Nuance
The government has, in recent years, focused on production-linked incentives (PLI) and infrastructure-led growth to boost manufacturing. These have yielded some early successes, especially in electronics and capital goods. However, the uneven growth pattern revealed by the IIP suggests the need for course correction.
A more inclusive industrial policy must prioritise:
- Credit access and technology support for micro, small, and medium enterprises (MSMEs).
- Export competitiveness in labour-intensive sectors such as textiles, footwear, and light engineering.
- Demand-side stimulus through income support, rural job schemes, and reduced inflationary pressures.
- Decentralised manufacturing ecosystems that link rural areas to value chains.
Equally important is investment in skills and human capital, ensuring that workers are equipped to transition into emerging industries while securing dignified employment in traditional sectors.
The Road Ahead
India’s industrial story is at a crossroads. The IIP data reveal an economy that is recovering, but in narrow pockets. For industrial growth to be sustainable and equitable, it must be broad-based, employment-generating, and demand-responsive.
If policymakers mistake this limited rebound for a structural turnaround, they risk complacency. The challenge now is not to celebrate growth at the margins but to deepen it — across regions, sectors, and social strata.
Economic resilience cannot rest on selective gains. It must rest on inclusive expansion, one that turns industrial recovery into shared prosperity.
Final Thoughts
India’s industrial pulse may have quickened, but its heartbeat remains uneven. The latest IIP data should serve as both encouragement and caution — a reminder that growth in numbers means little unless it translates into jobs, income, and opportunity for the millions who keep the country’s wheels turning.
