India’s factory output climbs to six-month high in November

India’s factory output climbed to a six-month high in an indication that some parts of the economy are seeing a revival.

The Index of Industrial Output (IIP) rose 5.2% in November, data released by the ministry of statistics and program implementation (MoSPI) on Friday showed.

The reading is higher than the revised 3.5% growth in October and 2.5% in November last year.

India will grow at a subdued 6.4% in the current fiscal year, the slowest in four years, according to the advance growth estimates released by the statistics ministry this month.

The lackluster growth comes as urban consumers tighten their purse strings amid declining wages and surging inflation.

The surge in factory output comes a respite for policymakers, including new Reserve Bank of India (RBI) governor Sanjay Malhotra, and is in line with the government’s estimates.

“This is in line with the first advance estimate of GDP (gross domestic product), which points towards an estimated improvement in industrial growth in H2 FY25 driven by a recovery in the manufacturing sector,” Rajani Sinha, chief economist at CareEdge, said, while pointing out that consumption-related components within IIP showed mixed signals.

“Output of consumer durables witnessed a strong growth of 13%, propped up by a supportive base. However, deceleration in growth of consumer non-durables output to 0.6% points towards some concern,” Sinha said.

Some recent sectoral outlook released by consumer firms have warned of a narrowing in margins.

However, given the signs of improvement in rural demand, the performance of consumer non-durable output remains monitorable, CareEdge said.

Sinha stressed that improving the investment climate is crucial for industrial performance.

Infrastructure/construction output rose 10% in November, but sustained public capex and private investment remain key, given slower projected investment growth in FY25.

She noted that consumption and investment are critical for industrial activity and will be key focus areas in the upcoming budget.

IIP data are typically released on the 12th of each month, or earlier if it falls on a holiday.

As 10 January is the last working day before the 12th, the IIP estimates were released on Friday and will be revised in future releases as per policy.