NEW DELHI, Jan 3:
India’s industrial momentum is entering a stronger phase, underpinned by a revival in consumption demand and broad-based improvement across key segments, according to CRISIL’s latest macroeconomic assessment released on Saturday here.
The rating agency believes the current industrial upturn reflects improving domestic fundamentals rather than a narrow or short-lived rebound, providing greater confidence about growth sustainability in the remainder of the financial year.
CRISIL’s analysis shows that consumption has emerged as the central driver of industrial performance. The sharp turnaround in consumer-oriented sectors signals rising household confidence, supported by a favourable macro environment.
Lower interest rates, easing inflation and tax relief measures are together improving discretionary spending capacity, which is feeding directly into manufacturing activity. CRISIL expects this demand impulse to remain intact over the coming months.
Manufacturing continues to be the backbone of the industrial recovery. CRISIL notes that the strength is no longer limited to select pockets, with output expanding across use-based categories.
Consumer durables have benefited from stronger demand in transport-related segments and electronics, reflecting improved urban consumption trends. At the same time, consumer non-durables have gained traction, led by pharmaceuticals and food products, indicating stable demand even in essential categories.
Investment-linked segments are also showing encouraging signs. CRISIL highlights that infrastructure and construction goods have posted strong growth, driven by higher output in metals and building materials, in line with improving core sector performance.
Capital goods growth, supported by machinery and fabricated metal products, suggests that investment activity is holding up, even as public capital expenditure is expected to moderate after being frontloaded earlier in the fiscal.
CRISIL points out that mining activity has contributed positively to industrial output, while the contraction in electricity generation has narrowed, indicating early signs of stabilisation.
Some pressure remains in refined petroleum products, where growth has softened, reflecting sector-specific dynamics rather than a broad slowdown.
On the external front, CRISIL observes that export-oriented industrial sectors have generally performed well, supported by strong merchandise trade momentum.
However, it cautions that global uncertainties could pose risks ahead. Potential weakness in goods exports, particularly due to tariff-related pressures from the United States, may emerge as a headwind in the final quarter of the fiscal.
Inflation trends remain a key supportive factor in CRISIL’s assessment. With retail inflation expected to stay benign due to lower crude prices and GST rate rationalisation, households are likely to retain spending headroom.
CRISIL also notes that the transmission of cumulative policy rate cuts is still unfolding, which should further ease borrowing costs and support both consumption and investment. (UNI)
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