NEW DELHI: India’s industrial output (IIP) grew a faster-than-expected 8% in August as manufacturing and electricity posted strong gains, outweighing a sharp contraction in mining, data released by the Ministry of Statistics and Programme Implementation on Monday showed.
July’s IIP growth was revised upwards to 7.4% from the provisional estimate of 6.7%. Industrial output had grown 4.7% in August 2025. Sequentially, the general index fell 1.8% from July, its biggest month-on-month decline in four months.
Industrial growth averaged 6.7% in the first five months of the current financial year, compared with 4.2% in the corresponding period last year, driven largely by manufacturing and electricity.
Manufacturing, which has the highest weight in the new IIP series at 76%, grew 9.0% in August, accelerating from 8.2% in July. The higher growth in manufacturing output was “aided by a favourable base on account of inventory recalibration in the year-ago month ahead of the implementation of the GST rate cuts,” said Rahul Agrawal, principal economist at ICRA.
Within manufacturing, 14 of the 23 sub-sectors performed better in August than in July. Electrical equipment, other transport equipment and motor vehicles recorded the highest growth rates at 30.9%, 25.3% and 25.2%, respectively.
Electricity and gas supply output grew at its fastest pace in 27 months, rising 12.3% in August amid higher power demand due to lower-than-normal rainfall, economists said.
Mining and quarrying output contracted 5.6% year-on-year in August, the sector’s worst performance since September 2023.
Growth in water supply, sewerage and waste management output — the newest addition to the IIP — eased to 6.3% in August from 7.4% in July.
“Stronger industrial activity is being driven purportedly by both households and businesses, with year-on-year growth in consumer durables and capital goods both continuing to heat up,” said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.
However, only two of the six use-based categories recorded faster growth in August than in July.
Intermediate goods growth rose to a 29-month high of 13.7% in August, up from 10.4% in June. Consumer non-durables output grew 2.1% year-on-year, reversing a 0.8% contraction in July.
Capital goods and consumer durables also recorded double-digit growth of 16.9% and 11.1%, respectively, although both segments grew more slowly than in July.
Primary goods output growth slowed to a three-month low of 3.5% in August from 4.2% in July, while infrastructure goods growth eased to a four-month low of 6.4% from 8.0%.
“Capital goods sector continued to grow and maintain its lead, pointing to continued investment activities in the economy. The segment’s performance along with growth in infrastructure/construction goods and intermediate goods – indicates increased investment activity,” said Devendra Pant, chief economist at India Ratings and Research.
IIP growth averaged 7.7% in July-August, up from 6.2% in April-June. This suggests “that industrial volume growth has remained strong in these months, which should partly offset the likely impact of margin pressure stemming from the renewed surge in global commodity prices, on the Q2FY27 GDP growth,” ICRA’s Agrawal said.
According to Madan Sabnavis, chief economist at Bank of Baroda, if the current pace of IIP growth is sustained, industrial output could grow 7-8% in FY27 “on the back of higher growth during the festival season with demand building up”.
Source: The Financial Express
