IIP growth eases to 4-month low in September as mining output contracts
September witnessed a decline in India's factory output growth, falling to 6.7%, the lowest rate observed in four months. The drop is largely linked to a high base effect and decreased mining activity. Despite this, manufacturing output surged by 7.6% compared to the previous year, while electricity generation also grew, spurred by robust demand even with insufficient rainfall. Economists…
India's factory output growth slowed to a four-month low of 6.7% in September, with mining output contraction playing a significant role, according to the latest Index of Industrial Production (IIP) data. The September reading is based on a revised 2022-23 base year series. Despite the slowdown, manufacturing and power generation continued to bolster overall industrial activity.
The September print marks the sixth monthly IIP reading based on the revised base year series. Industrial output expanded 7.8% in August and 6.1% in September 2025. Base effects and negative growth in the mining sector are cited as the main reasons for the slowdown in September, according to Devendra Pant, chief economist at India Ratings and Research (Ind-Ra).
While industrial production growth rose to 7.3% in Q2FY27 from 6.2% in Q1, expectations are high for GDP growth to exceed 7% in the July-September quarter. With strong IIP growth, particularly in Q2, the expectation is that GDP growth will surpass 7% in Q2FY27, as per Aditi Nayar, chief economist at ICRA.
Growth in the June quarter was recorded at 7.8%, with manufacturing leading the way at 7.6% year-on-year, driven by motor vehicles, trailers, semi-trailers production, electrical equipment, and rubber and plastics products. Of the 23 industry groups, 17 registered positive growth during the month.
Electricity and gas supply saw a significant increase of 11.2% year-on-year in September, although gas supply contracted by 6.7%. Strong electricity demand, fueled by deficient rainfall, supported power generation, with electricity generation from non-renewable sources growing at 16.5% and renewable sources at 4.3%.
Among the six use-based categories, only consumer non-durables showed higher year-on-year growth in September compared to August, growing 1.4% after contracting 1.1% in August. Consumer durables growth, however, slowed to 6% from 10.5%. The upcoming festival and wedding seasons are expected to bring buoyancy to consumer demand.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
