Industrial output growth a tad slower at 6.7% in September, expansion led by manufacturing, electricity generation

New Delhi: Growth in India’s factories and power plants continued in September, at a slower pace. IIP rose 6.7% from a year earlier, down from revised 7.8% in August, as manufacturing lost some steam and mining slipped further, government data showed on Wednesday.

Manufacturing, which accounts for about three-quarters of the index, grew 7.6%, down from 8.6% the month before, according to provisional data released by the ministry of statistics and programme implementation (MoSPI) on Wednesday. Power generation rose by 11.2% as electricity demand remained strong. Mining went the other way, with output down 6.2%.

Machinery and equipment that companies buy to expand rose 10.4%, pointing to firmer investment. Everyday consumer goods barely moved, up just 1.4%, suggesting households are still spending carefully.

The September release marks the sixth month of the new IIP series this fiscal year, with 2022-23 as the base year, replacing the 2011-12 series. The ministry will release linking factors so the new numbers can be compared with the old series.

• India’s industrial output grew 6.7% in September, down from 7.8% in August.
• Manufacturing growth cooled to 7.6% but remained above last year’s 5.5% pace.
• Mining output fell 6.2% in September, a deeper decline than August’s 4.6%.
• Capital goods output rose sharply by 10.4%, signalling business investment is improving.
• Everyday consumer goods output grew just 1.4%, pointing to weak household demand.

The expansion was relatively broad-based, with 17 of 23 manufacturing industry groups recording positive growth, but growth slowed from previous months. Key contributors included rubber and plastic products (19.9%), motor vehicles, trailers and semi-trailers (19%), and electrical equipment (33.9%), supported by higher production of beverages, transport equipment and textiles.

Mining and quarrying output contracted 6.2% year-on-year in September, down from a 4.6% contraction in August, and marked a sharp fall from 15.7% growth in September 2025, indicating continued lower extraction activity.

Electricity generation and gas supply increased by 11.2% during the month, down from 12.3% growth in August but significantly higher than 3.3% in the year-ago period, pointing to continued accelerated electricity production to meet rising power demand. Water supply, sewerage and waste management grew 5.8% in September.

Use-based classification data showed a mixed but largely positive trend, with capital goods output rising sharply by 10.4%, signalling improved investment activity, while infrastructure and construction goods grew by 7.2%, intermediate goods expanded by 12.2%, and consumer durables increased by 6.2%.

Primary goods posted modest 4.0% growth, and consumer non-durables 1.4%, reflecting some weakness in mass-consumption demand. Overall, infrastructure goods, intermediate goods and capital goods emerged as the key drivers of industrial growth during the month.

The output of India's nine core industries, which account for nearly 33% of the weight of the Index of Industrial Production, also accelerated to a historic high of 7.9% in September 2026, driven by a turnaround in the coal sector and increased activity in the refinery products and iron ore sectors. Earlier in May, the commerce ministry released the revised Index of Core Industries under the new series with FY23 as the base year. The new series tracks production of nine core industries compared with eight in the previous series.

The September IIP data suggest a gradual but uneven recovery in industrial activity, with manufacturing and investment-linked sectors gaining traction even as consumption trends remain mixed.

“The deceleration was broad-based, with all four sectors recording a deterioration in their YoY performance between these months,” said Aditi Nayar, chief economist, Icra on IIP. Industrial output growth rose to 7.3% in July-September from 6.2% in the previous quarter, and Nayar expects GDP growth to stay above 7%, but below April-June’s 7.8%.

The 2022-23 shift in the All India IIP is the 10th revision of its base year.

The revised index expands coverage beyond the traditional sectors of mining, manufacturing and electricity to include gas supply, water supply, sewerage and waste management activities. The mining and quarrying component has also been broadened to include minor minerals and rare earth minerals. It has also been split into dedicated indices for fuel minerals, metallic minerals and non-metallic minerals.

Devendra Pant, chief economist, India Ratings & Research, said steady growth in consumer non-durables supports demand, but weak rainfall, high crude prices, and calibrated tightening could weigh on consumer spending. “Ind-Ra is of the view that IIP growth could improve in October 2026 in the range of 8-9% due to the base effect in the overall index and especially for the manufacturing and electricity sectors.”

The energy basket also includes separate tracking of renewable and non-renewable electricity generation, allowing policymakers to better monitor India's evolving energy mix.

According to MoSPI, the new series comprises 463 item groups (1,042 mapped products) compared with 407 in the previous series, including 120 newly added products such as CCTV cameras, stents, aircraft and spacecraft parts, magnetic stripe cards, articles of non-woven textiles and vaccines. At the same time, 64 outdated products, including kerosene, CFL lamps, printing machines, sewing machines, and certain tyre tubes, have been dropped from the basket.

The data has also been made more representative by excluding shut factories, including operating units permanently, and inducting newly commissioned large factories.

The revised series uses 2022-23 gross value added and output data to derive weights and adopts the latest National Industrial Classification (NIC) 2025 for dissemination. The ministry will also release sectoral linking factors to enable comparison between the old and new series.

The IIP data is closely tracked as a high-frequency indicator of economic activity and provides an early signal on manufacturing momentum, investment demand and overall growth trends in the economy.

“The coming months are the festival/wedding season and should witness buoyancy in demand conditions, which should feed back into higher demand for non-consumer goods too,” said Madan Sabnavis, chief economist, Bank of Baroda. He said drought in some states could cut crop output and rural incomes, but he expects IIP growth of 7-8% for the year, with a 0.5 percentage point downside if the rural economy lags.

Subhash Narayan

Subhash is the infrastructure editor at Mint and tracks the momentous developments taking place in the space that is fast changing the Indian landscape. He finds reporting to be a passion that provides the necessary adrenaline rush and keeps you going.

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