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Time of India
6 hours ago
- Business
- Time of India
At 1.5%, industrial growth slows to 10-mth low in June
NEW DELHI: Industrial output growth slowed to a 10-month low in June, dragged down by a contraction in mining and electricity sectors and sluggish capital goods and consumer durables segments. Data released by the National Statistics Office (NSO) on Monday showed the index of industrial production (IIP) rose an annual 1.5% in June, slower than the upwardly revised 1.9% in May and below the 4.9% recorded in June last year. The mining sector contracted 8.7% in June compared with a growth of 10.3% in June last year, and the electricity sector fell 2.6% during the month compared to a growth of 8.6% in June last year. The manufacturing sector remained resilient, rising 3.9% during June compared to a growth of 3.5% in June last year. Experts attributed the slowdown to excess rains which had weighed on mining and electricity sectors. "Excess rains in the second half of June 2025 are likely to have weighed on mining output, while also leading to a contraction in electricity generation, although the extent of the same narrowed compared to the previous month. Encouragingly, the growth in manufacturing output improved to 3.9% in June 2025 from 3.2% in May 2025," said Aditi Nayar, chief economist at ratings agency Icra. The data also showed weakness in other segments of the industrial sector. The capital goods sector, a key gauge of industrial activity, remained sluggish during the month, rising by 3.5% in June compared to a growth of 3.6% in June last year. The consumer durables sector slowed in June, rising by 2.9% compared to a growth of 8.8% in June last year while the consumer non-durables sector contracted by 0.4% during the month compared to a decline of 1% in June last year. "On the demand side, signals remain mixed. Output of consumer non-durables goods continued to remain weak, staying in the contractionary zone for five consecutive months, while output of consumer durable goods improved. Urban consumption, in particular, remains lagging," said Rajani Sinha, chief economist at ratings agency CareEdge. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Mint
19 hours ago
- Business
- Mint
India's industrial production rises 1.5% in June, at slowest pace in 10 months
New Delhi: India's industrial production grew 1.5% annually in June, marking its slowest pace in 10 months, as mining and electricity output slipped into contraction, data released by the ministry of statistics and programme implementation (MoSPI) on Monday showed. The muted uptick stands in stark contrast to the 4.9% expansion recorded in June last year, highlighting persistent strains across core sectors of the economy. MoSPI revised May's growth figure to 1.9%, from 1.2% earlier, which still outpaces the June figure. Industrial performance through last year remained volatile, surging in May but flattening by August, underlining the lack of consistent recovery. The weak June reading reflects a fragile and uneven rebound in industrial activity, amid soft domestic demand, global economic uncertainty, and sector-specific challenges. Manufacturing, which constitutes almost 78% of the Index of Industrial Production (IIP), saw output rise 3.9% annually in June, higher than the 3.2% reported in May and 3.5% growth in June 2024. Mining output contracted by 8.7% annually in June, compared to a 0.1% contraction in May, and a 10.3% expansion in the year-ago period. Electricity generation shrank 2.6% annually in June, compared to a 4.7% contraction in May and an 8.6% expansion in the year-ago period. Among use-based classifications, the production of intermediate goods and infrastructure/construction goods showed a sequential rise. Intermediate goods output rose 5.5% annually in June, compared to a 4.7% annual growth registered the previous month. Infrastructure/ construction goods output rose 7.2% annually in June, compared to 6.7% in May. Capital goods production fell 3.5% annually in June, down from 13.3% in the previous month. Meanwhile, primary goods production contracted by 3% annually in June, compared to a 1.4% contraction in May. Production of consumer durable goods rose by 2.9% annually in June compared to a contraction of 0.9% in the previous month. During the same period, production of consumer non-durables contracted by 0.4% annually, compared with a 1% contraction reported in the previous month. The June IIP numbers came in below expectations. Rating company Icra Ltd. had projected a 2% rise in industrial output. "The deceleration was entirely led by mining, which reported a steeper contraction of 8.7% in the month as compared to the 0.1% dip seen in May 2025. Excess rains in the second half of June 2025 are likely to have weighed on mining output, while also leading to a contraction in electricity generation, although the extent of the same narrowed compared to the previous month," said Aditi Nayar, chief economist at Icra. "Encouragingly, the growth in manufacturing output improved to 3.9% in June 2025 from 3.2% in May 2025," Nayar added.
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Business Standard
5 days ago
- Business
- Business Standard
Edge data centre capacity in India likely to triple by 2027, says Icra
India's edge data centre capacity is expected to expand significantly to 200-210 Megawatt (MW) by 2027, up from 60-70 MW in 2024, marking a 3x increase, driven by the proliferation of emerging technologies, said rating agency Icra. Global data centre capacity (including capacity held by cloud operators) is estimated at around 50 Gigawatt (GW) as of December 2024, of which about 10 per cent is edge data centres. The US commands over 44 per cent of worldwide edge data centre capacity, followed by Europe, the Middle East and Africa (EMEA) region at 32 per cent, and the Asia Pacific (APAC) region at 24 per cent. Edge data centres are smaller, decentralised facilities located closer to end-users and devices. Unlike traditional data centres, which are typically large and centralised, edge data centres enable real-time data processing with minimal latency (the delay between a user action and the corresponding system response). India is a relatively new entrant in the edge data centre market. The current edge data centre capacity as a percentage of total India's data centre capacity stands at around 5 per cent, said Icra. Further, excluding the edge data centre capacity used for captive purposes by one of the large data centre operators, the current edge data centre capacity as a percentage of total capacity is as low as 1 per cent. Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings, Icra, said: 'In the Indian context, traditional data centres and edge data centres are complementary pillars of digital infrastructure. With the expanding cloud ecosystem of India, traditional data centres will continue fueling mass-scale computing, artificial intelligence (AI), and cloud workloads, and edge data centres will facilitate real-time processing and localised services. Traditional and edge data centres are expected to operate in the hub-and-spoke model to enhance efficiencies across sectors such as healthcare, banking, agriculture, defence, and manufacturing.' Despite the promising outlook, some of the key challenges for edge data centres include security vulnerabilities due to remote deployments (mainly in tier II and tier III cities), rapid technological changes that risk obsolescence, a shortage of skilled professionals in remote areas, and interoperability issues with traditional data centres. 'The rentals for edge data centres are anticipated to be on the higher side compared to traditional data centres, as they will be catering primarily to retail customers, compared to enterprise/hyperscale customers for traditional data centres. Moreover, the relatively higher capex cost per MW for edge data centres compared to a traditional data centre is expected to be compensated by higher rentals. Established data centre players and entities like RailTel and telecom operators are likely to lead the edge data centre expansion in India,' Reddy added.
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Business Standard
7 days ago
- Business
- Business Standard
Construction industry margins to stay between 10.25-10.75% in FY26: Icra
Amid intense competition in the sector, operating margins of construction industry players are estimated to remain steady at 10.25-10.75 per cent in FY26, down from 10.6 per cent in FY25, according to Icra. This marks a sharp decline from the margins in FY21, which stood at 13-14 per cent. The ratings firm has also revised its revenue growth estimate for the industry in FY26 to 6-8 per cent, down from the earlier guidance of 8-10 per cent, due to continued headwinds in road-awarding activity as well as a slowdown in the execution of Jal-Jeevan mission-related projects. However, an expected ramp-up in other segments, especially urban infrastructure and irrigation, may result in relatively better performance for the industry in FY26, compared to flat growth during FY25. Further, the aggregate order book/operating income for Icra's sample set of entities is expected to be 3.5x as of March 31, 2026, providing adequate revenue visibility for industry participants. The aggregate order book/OI was 3.4x as of March 31, 2025. Icra's sample set features 19 companies with a combined turnover of almost Rs 1.3 trillion in FY25. Suprio Banerjee, vice president and co-group head, corporate ratings at Icra, said, 'Contractors, largely focused on the road segment, are likely to underperform compared to broader trends, owing to the slowdown in order-awarding activity from the MoRTH/NHAI. Several mid-sized road construction entities have an order book/revenue ratio of less than 2.0 times, indicating imminent stress on their revenue prospects in FY26, far below the industry average of around 3.5 times." However, players focused on segments like urban infrastructure or the energy sector are expected to sustain double-digit revenue growth in FY26. The majority of road projects under the MoRTH/NHAI were awarded at a sizeable discount compared to the authority's base price, indicating heightened competition. The competition in other sectors, such as metro, water supply, and sanitation, has also intensified, with new entrants trying to diversify their order books, Icra noted. The operating margins of players are expected to remain under check due to aggressive competition, although stable commodity prices and operating leverage benefits should provide some support to profitability. 'While debt levels are likely to increase to support higher working capital requirements, the corresponding operational leverage benefits are projected to keep the interest cover adequate at 3.5-3.8 times in FY26. Given the moderate leverage and satisfactory debt coverage metrics, Icra maintains a stable outlook on the construction sector,' Banerjee added. Construction activities — particularly road projects — have been notably affected due to lower fresh order inflows following the enforcement of the model code of conduct in Q1 FY25, coupled with execution-related challenges due to an extended monsoon season and a transition to milestone-based billing.
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Business Standard
21-07-2025
- Business
- Business Standard
India's core sector growth in June tepid at 1.7%, shows govt data
The growth in the output of India's eight key infrastructure industries remained subdued in June, even as it accelerated to a three-month-high at 1.7 per cent year-on-year, compared to a revised 1.2 per cent in May, data released by the Department for Promotion of Industry and Internal Trade (DPIIT) on Monday showed. The provisional estimate for May was 0.7 per cent. In June last year, the core sector grew at 5 per cent. With the core sector accounting for 40 per cent of the index of industrial production (IIP) growth, the slowdown may weigh on overall industrial growth as well. During the first quarter of the financial year 2025-26 (FY26), core sector comprising of eight sectors- coal, steel, cement, fertilisers, electricity, natural gas, refinery products, and crude oil- grew at a measly 1.3 per cent, compared to a robust 6.2 per cent during the same quarter a year ago. During June, five out of the eight sectors witnessed contraction – coal (-6.8 per cent), crude oil (-1.2 per cent), natural gas (-2.8 per cent), fertiliser (-1.2 per cent) and electricity (-2.8 per cent). On the other hand, production of refinery products, steel, and cement witnessed robust growth of 3.4 per cent, 9.3 per cent and 9.2 per cent, respectively in June, compared to the same period a year ago. Aditi Nayar, chief economist at Icra, said that while an elevated base weighed upon coal output, excess rains in the latter half of June impacted electricity generation. 'Encouragingly, the output of the cement and steel sectors rose by a robust 9.2-9.3 per cent in June, although this was supported by a favourable base in the case of the former. The growth in volumes of these segments has been quite healthy in Q1FY26, which implies that the construction sector is poised to record a robust GVA growth in the quarter. Given the subdued growth in core output, Icra expects the IIP growth to print at 1.5-2.5 per cent in June 2025,' Nayar said.
