Sluggish industrial expansion recorded in India as output growth dipped to a 10-month low of 1.5% in June 2025
India's industrial output growth took a hit in June 2025, falling to a 10-month low of 1.5%, according to data released by the National Statistics Office (NSO). The key factors contributing to this slowdown are a significant contraction in the mining sector and a decline in electricity generation.
The mining sector contracted by 8.7%, marking the third consecutive month of decline. This sharp contraction had a strong negative impact, shaving off about 124 basis points from the headline industrial production growth. A high base effect worsened the mining sector's sequential decline compared to May 2025.
Electricity generation also contributed to the slowdown, with a 2.6% decline after modest growth the previous year. This marks the second consecutive month of contraction in electricity output.
However, the manufacturing sector did not fare as poorly, expanding by 3.9%. This growth, while slightly better than the previous month, was not enough to fully offset falls in mining and electricity.
The slowdown in industrial output growth reflects a broader trend, with industrial output growth falling to 2% for the April–June quarter, the lowest in 11 quarters, compared to 5.4% in the same period the prior year.
Within the manufacturing sector, 15 out of 23 industry groups have recorded a positive year-on-year growth in June 2025. However, the growth of the capital goods segment decelerated to 3.5% in June 2025 compared to the year-ago period.
The World Gold Council revised down 2025 gold demand due to a 12% fall in consumption in the first half. This decline in gold demand may have a ripple effect on the gold mining industry, which is a part of the mining sector.
In conclusion, the mining and electricity sector contractions, compounded by a high base effect in mining, are the main reasons for the June 2025 slowdown in industrial output growth, despite moderate manufacturing gains. The NSO data also did not provide specific details about the growth of the remaining 8 industry groups within the manufacturing sector.
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The mining sector's contraction, contributing a negative impact of 124 basis points to the headline industrial production growth, played a significant role in the slowdown of India's industrial output growth to a 10-month low in June. The worsening of the decline in the mining sector's sequential performance, due to a high base effect, was one of the key factors.
Despite the World Gold Council revising down 2025 gold demand due to a 12% fall in consumption in the first half, the gold mining industry, a part of the mining sector, was impacted by the contraction in the mining sector and the related slowdown in industrial output growth.
