The production of India showed signs of improvement in the last tax, current tax can witness pressure: Bank of BarodaNew Delhi [India]April 14 (ANI): The production in the country showed signs of improvement by the end of the last financial year, supported by an increase in high-frequency indicators such as production PMI, GST collections and e-Way Bill generations, according to a report from Bank or Baroda.
However, the report also stated that the first quarter of the current financial year could see some pressure, mainly due to uncertain global trade conditions, where export growth remains an important risk.
It said: “Given the latest improvement in the production of PMI for Mar’24, together with collection in E-Way Bill Generations and GST collections, we expect that the production has reported some improvement by the end of the last tax year. A few headwinds appear in Q1 of the current tax year.”
The report emphasized that the step of the reserve Bank of India to lower the policy rates is expected to lower credit costs, which will offer the production sector exemption. This development is expected to encourage production and investments.
In addition, the announcement by the Trump government of a 90-day break on the implementation of land-specific rates, together with a softening of global raw materials, is also seen as a positive factor for the short-term prospects of the sector.
Despite these positives, the latest data on industrial output outlines a mixed image. India’s Index of Industrial Production (IIP) Growth delayed to 2.9 percent in February 2025, compared to 5.6 percent in February 2024 and 5.2 percent in January 2025.
The fall in the output was wide compared to the same month last year. The mining and electricity sectors in particular witnessed the most important delay, while the production sector saw a more moderate decline.
Within the production segment, many important industries reported a lower output in February 2025 compared to the previous year. These include basic metals, clothing, chemicals and motor vehicles. On the other hand, some subsectors such as pharmaceutical products, textiles and computers/electronics saw an improvement in the output.
According to the use -based classification, only capital goods showed growth on an annual basis in February 2025. The output of primary goods, intermediates, infrastructure goods and sustainable consumer fires fell. The production of non-durable consumers also fell, although the pace of the fall was slower than that in February 2024.
In general, the IIP growth has been moderated to 4.1 percent for the financial year to date (FYTD), compared to 6 percent growth in the same period last year. Although the production was probably picked up by the end of FY25, helped by favorable domestic indicators, the prospects for the first quarter of FY26 remain mixed.
Lower loan costs and a temporary break for trading rates offer a pillow, but the volatility in markets and the uncertainty of current trade stresses in the US and continue to risks for India production growth. (ANI)
