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Growth in India’s industrial output, as measured by the Index of Industrial Production (IIP), slowed to 6.7% in July from a 27-month high in June, mainly because of a contraction in the mining output, data released by the Ministry of Statistics and Programme Implementation on Friday showed. A slowdown in manufacturing and electricity growth also weighed on the headline print.
IIP growth last month eased from an upwardly revised 8.8% in June, which is the highest growth since March 2024. Industrial output had grown 5.4% in July 2025. Sequentially, the general index was unchanged from June.
“Despite the moderation, it is comforting to note that industrial activity has been largely resilient in the fiscal year so far despite global uncertainties and elevated energy prices,” said Rajani Sinha, chief economist at CareEdge Ratings.
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Industrial growth has averaged 6.3% in first four months of the current financial year, higher than 4.0% growth in the same period a year ago. Higher IIP growth this year has been supported by manufacturing and electricity sectors.
Sectoral Breakdown
In July, mining and quarrying sector output fell 0.9% year-on-year, reverting to contraction after registering a 1.6% growth in June. “Usually, July sees some seasonal softening in industrial activity, particularly mining with the onset of the monsoon season. Moreover, mining activity this year could have also been affected by continued impact of lingering geopolitical tensions weighing on overall industrial growth,” HDFC Bank economists said in a note.
Manufacturing sector, which has the highest weightage in the new IIP series at 76%, grew 7.3% in July, slower than a 9.5% rise in June.
Within manufacturing, 15 of the 23 sub-sectors saw slower growth in output in July compared to the previous month. Electrical equipment and motor vehicles saw the highest growth in July within manufacturing of 28.3% and 22.2%, respectively.
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“Auto sector has continued to see sustained momentum post-GST cuts, while strong exports market and investment-related demand continue to support electrical equipment and machinery,” HDFC Bank said.
The high manufacturing growth corroborates well with the financial results of companies for April-June, which would have been extended in July too, said Madan Sabnavis, chief economist, Bank of Baroda.
Growth in electricity and gas supply output eased to 8.7% in July from 11.3% in June, with non-renewable sources leading the rise with a 12.5% growth. Renewable electricity saw only a 3.2% growth in July, sharply lower than 7.3% in June.
Water supply, sewerage, and waste management—the newest addition to IIP—was the only sector where growth rose in July. Growth rose to 7.4% in July from 6.1% in June.
Five of the six use-based categories saw slower output growth in July compared to June.
Capital Goods
Infrastructure goods and capital goods grew 6.9% and 16.1% in July, respectively. This was slower than 8.8% and 17.9% growth in June, respectively. The capital goods segment continued to see the highest growth among use-based categories.
“Capital goods sector continued to grow and maintain its lead. The segment’s performance along with growth in infrastructure/construction goods and intermediate goods – indicates increased investment activity,” said Devendra Pant, chief economist, India Ratings and Research.
The output in the primary goods segment grew 4.1% in July, slower than 5.4% in June. Intermediate goods growth slowed to 10.0% last month from 11.5% in June. Consumer non-durables output contracted 1.0% in July, having grown 5.6% in June.
Consumer durables was the only use-base category to see higher growth in July, with output increasing 10.5% as against 10.3% in June.
Moving ahead, economists expects industrial output growth to remain strong even if it moderates slightly. According to CareEdge’s Sinha, rising inflationary pressures and weather-related uncertainties pose a risk to the domestic consumption and investment scenario.
“Looking ahead, industrial activity will need to navigate an uncertain external environment alongside challenges on the domestic front,” Sinha said.
TOPICSIIPThis article was first uploaded on August twenty-eight, twenty twenty-six, at sixteen minutes past seven in the evening. © The Indian Express (P) Ltd