India's IIP data contracts -0.3% in December, auto manufacturing drops -12.1%

The Index of Industrial Production (IIP) for India for the month of December 2019, has shown another month of disappointment for the Indian economy. As per the quick estimates the IIP with base 2011-12 for the month of December 2019 stands at 133.5, which was 0.3 percent lower as compared to the same period last year.

The result once again shows a drop in production on the back of subdued demand across sectors. In fact, 16 of the 23 industry groups covered under the data have witnessed negative growth in December. Furthermore looking at the data for the Motor vehicles, trailers and semi-trailers industry, the decline was at 12.1 percent.

What could be worrisome is that the domestic automotive industry already reeling under the pressure of slowdown, as well as the upcoming transition towards BS VI emission norms from April 2020, which is expected to continue to put pressure on the retail sales. And with the recent outbreak of the ongoing novel Corona virus, the Indian automotive industry could potentially hamper the industry manufacturing output.