India’s industrial production growth, measured by the Index of Industrial Production (IIP), is estimated to have surged to 3.7% in January 2025, marking an improvement from 3.2% in December 2024, according to a report by Union Bank of India. Despite the monthly rise, this figure remains lower than the 4.2% growth recorded in January 2024, indicating a year-on-year slowdown in the industrial sector.

The report attributes this increase to an overall rise in industrial activities, supported by strong economic indicators. While India’s merchandise exports contracted by 2.4% year-on-year in January, the country’s merchandise imports grew by 10.3%, highlighting robust domestic demand.

Key Economic Indicators Show Positive Trends

Several high-frequency economic indicators reflect an upward trend in industrial activities:

• E-way bill generation, an indicator of interstate goods movement, saw a 23.1% jump in January compared to the same month last year, suggesting higher business transactions and supply chain efficiency.
• Toll collections surged in both volume and value terms, reinforcing the increase in transportation and freight movement across India.
• Petroleum consumption grew by 3.1%, signaling higher fuel demand from transportation, manufacturing, and industrial expansion.

India’s Automobile Sector Rebounds

The automobile sector, which had witnessed a slowdown in the past two months, showed signs of recovery in January:

• Wholesale automobile sales increased by 2.5% year-on-year, led by a resurgence in the two-wheeler segment.
• Tractor sales recorded double-digit growth for the second consecutive month, indicating strong rural demand.
• Vehicle registrations expanded, showing a boost in consumer sentiment and purchasing power.

Industrial Momentum Expected to Strengthen

Despite the year-on-year decline in IIP growth, the upward trend in industrial activity suggests strong momentum for the coming months. Manufacturing, trade, and infrastructure-related indicators remain positive, indicating that the industrial sector is on a recovery path.

Experts believe that continued policy support, robust domestic demand, and infrastructure expansion will further strengthen India's industrial growth in 2025.