India's industrial output growth decelerated to 2.9% year-on-year in February 2025, marking the slowest expansion since August 2024, according to government data released on April 11. This figure fell short of the 4% growth anticipated by economists polled by Reuters and represents a decline from the revised 5.2% growth recorded in January.

The moderation in industrial activity was broad-based, with key sectors exhibiting slower growth:
• Manufacturing: Expanded by 2.9% in February, down from January's revised 5.8% growth.
• Electricity Generation: Increased by 3.6%, showing improvement from the previous month's 2.4% rise.
• Mining: Grew by 1.6%, a slowdown compared to January's 4.4% expansion.

Aditi Nayar from ICRA noted that while mining performance is expected to weaken further in March, steady manufacturing activity and increased electricity generation may help offset the decline.

For the April-February period of the fiscal year, cumulative industrial output growth stood at 4.1%. The slowdown in February's industrial production adds to concerns about the overall economic momentum. Earlier in the week, the Reserve Bank of India reduced its growth forecast for the current fiscal year by 20 basis points to 6.5%. Economists caution that ongoing global uncertainties, including potential U.S. import tariffs, could further dampen growth prospects.

Industries worldwide are grappling with the implications of potential U.S. import tariffs, which could adversely affect the manufacturing sector and broader economic growth. The uncertainty surrounding global trade policies adds to the challenges faced by India's industrial sector, emphasizing the need for strategic measures to bolster domestic economic resilience.