Industrial credit growth in India slowed to 7.6% in June 2025, according to the latest data from the Reserve Bank of India (RBI). This marks a moderation from the double-digit growth seen earlier, reflecting weaker investment demand, higher borrowing costs, and subdued global trade conditions.
The decline raises concerns about the pace of industrial recovery, even as overall credit growth across retail and services segments remains robust.
Credit Growth Trends
The slowdown in industrial credit was driven by multiple factors:
High Borrowing Costs: Elevated interest rates discouraged new project financing.
Weak External Demand: Export-linked industries faced headwinds from tariff shocks and global uncertainties.
Cautious Investments: Corporates delayed capital expenditure plans amid slower consumption recovery.
In contrast, retail credit continued to grow at a healthy pace, highlighting the divergence between household demand and industrial expansion.
Sectoral Insights
The moderation was particularly visible in core industries such as:
Textiles and Leather: Affected by global tariff barriers and slowing orders.
Metals and Chemicals: Weighed down by volatile commodity prices.
Infrastructure-linked Sectors: Slowed disbursements despite ongoing government capex push.
This signals that while government spending is strong, private sector participation in industrial growth remains uneven.
Policy Perspective
Economists suggest that a revival in industrial credit will depend on:
Monetary Policy Support: RBI’s stance on liquidity and rates amid slowing growth.
Export Diversification: Expanding beyond U.S.-centric markets to reduce tariff exposure.
Business Confidence: Improved clarity on global and domestic demand conditions.
The slowdown also highlights the need for structural reforms to unlock private investment and complement government-led infrastructure spending.
Why This Matters
For Businesses: Indicates tighter financing conditions and cautious lending.
For Policymakers: A reminder that industrial recovery remains fragile despite overall credit growth.
For Citizens: Slower industrial expansion could affect jobs and income opportunities in manufacturing hubs.
The dip to 7.6% industrial credit growth signals caution in India’s growth momentum and underscores the importance of aligning fiscal, trade, and monetary policies.
