Sovrenn Times: Macroeconomy Update | 20 Aug 2025
India’s Core Sector Output Grows 2% in July 2025, Led by Steel & Cement
India’s core sector output rose 2% YoY in July 2025, with strong growth in steel (+12.8%)and cement (+11.7%), according to government data. This marks the 12th straight month of steel production growth. The fertiliser industry rebounded with 2% growth after three months of contraction, while electricity generation rose 0.5%. The overall index for June was revised upward to 2.2% from 1.7%. However, coal (-12.3%), crude oil (-1.3%), natural gas (-3.2%), and refinery products (-1.0%) dragged performance, reflecting persistent weakness in fossil-fuel-linked sectors. The eight core industries—coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity—together account for 40.3% of India’s IIP (Index of Industrial Production).
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India’s Non-Smartphone Electronics Exports Cross $14 Bn, Push Overall Electronics Exports to $38.6 Bn in FY25
India’s electronics exports jumped 32.5% YoY to $38.57 bn in FY25, with non-smartphone categories contributing $14 bn+, according to ESC. Electronics now form 9% of total merchandise exports, up from 6.7% last year. Solar panels ($1.12 bn), telecom equipment ($1.4 bn), rectifiers & inverters ($2.5 bn+), PCs & digital units ($0.81 bn), and medical electronics ($0.4 bn) drove the surge. Tamil Nadu ($14.65 bn), Karnataka ($7.8 bn), and Uttar Pradesh ($5.26 bn) led state-wise exports, reflecting strong regional ecosystems. The momentum aligns with India’s semiconductor push, with ₹1.18 lakh cr+ in new projects, including Tata’s ₹91,000 cr fab and Micron’s ₹22,516 cr ATMP unit. ESC said this milestone reflects PLI schemes, duty rationalisation, and skilling, positioning India on track for its $200 bn electronics export target by 2030.
50% Less Plastic, 100% Renewable Energy: FMCG & Retail Leaders Call for Sustainable PLI and Global FTAs to Make India a Manufacturing Hub
At FICCI’s 14th Massmerize Conference, leaders from FMCG, retail, and e-commercecalled for expanding India’s FTAs to secure cost advantages and preferential access in key markets. Mayank Mohan of Mohanlal Sons highlighted that Bangladesh and Vietnam export more textiles than India, stressing that FTAs with the UK and US could bridge the gap. Speakers urged extending the PLI scheme to sustainable fabrics and quality manufacturing, warning against incentivising low-quality output. L’Oréal India MD Aseem Kaushik showcased sustainability moves—refillable fragrance bottles cutting material use by 50%, plastic neutrality, and renewable energy-powered plants. Executives from Marico, ChrysCapital, and Piramal agreed India’s domestic demand + global supply chain shifts present a rare chance to emerge as a competitive manufacturing hub.
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CRISIL Warns: 70% MSME-Dominated Sectors Face Severe Hit from US Tariff Surge
The US has doubled tariffs on Indian goods to 50% (from 25%), effective August 27, 2025, a CRISIL report warned. MSMEs responsible for 45% of India’s exports—will take the hardest blow, especially in textiles, gems & jewellery, and chemicals, where their share exceeds 70%. Textiles and gems & jewellery, together making up 25% of India’s exports to the US, are most exposed. Surat’s diamond exporters—with the US as their top buyer—face the sharpest pain. Chemicals, where MSMEs hold a 40% share, also risk losing ground to Japan and South Korea, who enjoy lower tariffs. Steel MSMEs are relatively shielded since the US mainly imports flat products, while Indian MSMEs focus on re-rolling and long products. Ready-made garments could lose competitiveness against Bangladesh and Vietnam, which continue to face lower US tariffs.
Mudra NPAs Surge to 9.8% of Outstanding Loans by March 2025
The Non-Performing Asset (NPA) ratio under the Pradhan Mantri Mudra Yojana (PMMY) rose sharply to 9.81% of outstanding loans as of March 2025, compared to 5.47% in March 2018. In contrast, NPAs against the amount disbursed declined to 2.19%, down from 2.71% in 2018. The broader MSME sector’s NPAs stood at 3.60%, highlighting the relatively higher stress within Mudra loans. The scheme’s focus on collateral-free loans to first-time entrepreneurs has contributed to elevated defaults. To counter risks, the government is strengthening the framework through credit guarantees, simplified processes, and tighter monitoring. Despite the challenges, PMMY remains a crucial tool for financial inclusion and entrepreneurship support.