Indian registered factories scaled back fresh investment in FY25 even as employment reached a record level.
Gross fixed capital formation (GFCF) declined 8% to ₹63,497 crore during the year. It was the first fall in factory investment since FY21.
GFCF had surged 77% in FY23 and increased another 18% in FY24, according to a report by Business Standard citing the latest Annual Survey of Industries (ASI).
Investment slows as employment rises
The moderation in investment was also reflected in fixed capital per worker, which rose 3.1% in FY25, compared with 5.9% a year earlier. This suggests that factories expanded employment without a corresponding increase in machinery and other fixed assets.
As per experts, the slowdown in FY25 came after the high investment recorded in the previous two years.
As per the report, the subdued pace of capital addition coincided with weak worker productivity. Output per worker declined 0.4% in FY24 and increased only 0.5% in FY25.
The two consecutive years of near-flat productivity growth represent an unusual period in the ASI record, which dates back to 1981-82. By comparison, productivity increased 25.3% in FY22 and 13.1% in FY23.
Profit per factory increased 5% in FY25 to ₹4.33 crore, while wages per worker rose 5.3% to ₹2.28 lakh. This marked a shift from FY24, when profit growth of 7% outpaced wage growth of 5.5%.
Wage growth varied significantly across states. Sikkim recorded a 47.7% increase in emoluments per person engaged, followed by Tripura at 15%, Bihar at 12%, Chhattisgarh at 9% and Telangana at 8.9%.
Odisha recorded the highest output per person engaged in FY25 at ₹1.42 crore. Sikkim followed at ₹1.29 crore, while Chhattisgarh, Jharkhand and Gujarat recorded ₹1.1 crore, ₹1.04 crore and ₹1.03 crore, respectively.
