Context:
• India’s industrial growth has slipped to a five-year low, signalling uneven recovery despite a rebound in manufacturing.
• Contractions in labour-intensive industries raise concerns regarding employment generation and rural demand.
Key Highlights
- Overall Growth Trend
- Industrial growth for April–September 2025 slowed to 3%, the weakest in five years.
• Q2 FY26 improved slightly with 4.1% growth, compared to 2% in Q1.
- Manufacturing Sector Performance
- Manufacturing grew 4.8% in September 2025, second-highest in FY26.
• 4.9% growth in July–September 2025—fastest since December 2023.
- Mining Slump
- Mining contracted in September 2025, Q2, and the first half of FY26.
• While monsoon disruptions play a role, performance is still unusually weak.
- Contraction in Sub-Sectors
- Over half of the 23 major manufacturing sub-sectors contracted in Q2.
• Consumer non-durables contracted for six consecutive quarters → signals weak demand.
Significance
- Uneven Manufacturing Revival
- Despite improvement, manufacturing growth is not broad-based.
• Gains are concentrated in capital-intensive sectors:
– Wood
– Mineral products
– Basic metals
– Fabricated metal products
- Labour-Intensive Sectors Under Stress
- Contraction recorded in:
– Apparel
– Leather
– Rubber
– Plastics
• These sectors are key job creators → raises employment and income concerns, especially in MSME-heavy regions.
- Persistent Weakness in Consumer Non-Durables
- Six-quarter contraction → indicates slack household demand.
• Policymakers emphasise boosting incomes and job creation to revive consumption.
- Mining Sector Underperformance
- Partly due to monsoon but also reflects structural issues in:
– Energy supply
– Mineral security
– Policy bottlenecks in exploration and productivity
- Positive Signals
- Manufacturing saw the fastest quarterly growth since Q4 2023.
• Industrial momentum improving gradually but needs broad-base expansion.
Mains-Oriented Analysis
GS-3: Economy
- Structural Weakness in Industrial Growth
• Growth not uniform across sectors → indicates imbalanced recovery.
• Heavy reliance on capital-intensive sectors risks jobless growth. - Labour-Intensive Contraction & Job Concerns
• Declines in apparel, leather, rubber, plastics reflect:
– Weak exports
– Elevated input costs
– Slow domestic demand
• Job losses can suppress consumption → risk of a demand slowdown loop. - Mining Sector Challenges
• Mining weakness impacts:
– Energy supply chain
– Infrastructure projects
– Strategic minerals for clean energy transition
• Strengthening exploration & production is crucial. - Policy Imperatives
• Boost rural and urban incomes to stimulate demand.
• Incentivise labour-intensive and MSME sectors.
• Accelerate reforms in mining & logistics.
• Enhance targeted fiscal support for consumer non-durables. - Outlook
• Industrial recovery will remain uneven unless:
– Demand revives
– Labour-intensive manufacturing expands
– Mining stabilises
• A balanced sectoral recovery is key for sustainable employment-led growth.