NEW DELHI: Growth in India’s industrial output, as measured by the Index of Industrial Production (IIP), slowed to a four-month low of 6.7% in August, pulled down by the mining sector’s worst performance in three years, data released by the Ministry of Statistics and Programme Implementation on Wednesday showed.
The August IIP growth print was revised lower to 7.8% from the 8% provisional estimate. Industrial output had grown 6.1% in September 2025.
Manufacturing sector, which has the highest weightage in the new IIP series at 76%, expanded 7.6% in September, the slowest growth in four months. Within manufacturing, only 10 of the 23 sub-sectors performed better in September compared to August.
Sequentially, the general index rose 1% from August, the biggest month-on-month rise in three months. The sequential uptick in industrial activity suggests that an unfavourable base effect weighed on the headline growth in September.
Industrial growth has averaged 6.8% in the first six months of the current financial year, higher than the 4.4% growth in the same period a year ago. Higher IIP growth this year has been driven by the manufacturing and electricity sectors.
In September, mining sector output contracted 6.2% year-on-year, the biggest fall since September 2023. Mining and quarrying sector output has contracted in eight of the nine months in 2026. Economists said the sector’s output fell in September due to disruptions caused by monsoon rains during the month.
Apart from mining, activity in the other three industrial sectors remained largely resilient in September even as growth moderated from the previous month.
“The resilience is consistent with the growth observed across key high-frequency indicators such as GST collections, automobile sales, e-way bill generation, and merchandise exports,” said Rajani Sinha, chief economist at CareEdge Ratings. “This reflects that domestic economic momentum has held up well despite persistent global and domestic uncertainties,” Sinha said.
“Manufacturing growth has been driven by the auto segment and electrical machinery with support from rubber products, computer, electronics and non-metallic machinery,” said Madan Sabnavis, chief economist, Bank of Baroda. “Growth was down in case of wearing apparel and chemicals and pharma sectors. The export market was affected here by global disturbances,” Sabnavis said.
Electricity and gas supply output growth slowed down to 11.2% in September from a 27-month high of 12.3% in August.
Electricity generation from non-renewable sources grew 16.5% in September, the quickest pace of growth in 30 months. Renewable electricity, meanwhile, grew 4.3% in September, slower than 15.4% in August.
Growth in output of water supply, sewerage, and waste management—the newest addition to IIP—eased to a four-month low of 5.8% in September from 6.3% in August.
In terms of the use-based categories, five of the six segments saw moderation in growth in September.
Consumer non-durables was the only use-based segment where output performance was better than August. The segment’s output grew 1.4% in September after contracting for two consecutive months.
Capital goods and intermediate goods saw double digit growth in September even as it was lower than August. Capital goods output rose 10.4% last month, slower than 15.9% in August. Intermediate goods output growth eased to 12.2% in September from 14.2% a month ago.
Primary goods, which has the highest weight among use-based segments at 31%, grew at a four-month slow pace of 4.0% in September.
Infrastructure goods output growth moderated to 7.2% in September from 8% in August, while consumer durables grew 6% last month, down from 10.5% in August and the slowest growth in five months.
“Overall, a few key themes remain in play. Consumer-facing industries are still not contributing to top-line growth as much as they have done in the past, mainly because of the K-shaped underperformance of non-durables,” said Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics.
“Support from investment-related goods—capital and infrastructure products—continues to look strong by comparison, though year-on-year growth here has ebbed over the past two months to something closer to average,” Chanco said.
IIP growth averaged 7.3% in the July-September quarter, higher than 6.2% in April-June. Higher IIP growth in the second quarter of FY27 complimented the strength visible across high frequency indicators, said Aditi Nayar, chief economist at ICRA.
ICRA projects GDP growth to exceed 7.0% in July–September, but moderate from 7.8% growth seen in April–June.
Source: The Financial Express / Business Standard
