India's industrial production showed a notable deceleration in July, with industrial output growing 6.7% year-on-year, according to the latest data from the Ministry of Statistics and Programme Implementation. This represents a significant slowdown from the 8.8% growth recorded in June, indicating a cooling in industrial momentum. The July figures came in above the market estimate of 6%, suggesting that industrial activity continued to expand at a healthy pace despite the moderation from the previous month. The Quick Estimate of IIP stands at 124.8 against 117.0 in July 2025, showing year-over-year improvement despite the monthly slowdown. As per the Ministry of Statistics and Programme Implementation, this is the fourth monthly Index of Industrial Production (IIP) data under the new series.
The manufacturing sector, which accounts for more than three-fourths of the index of industrial production (IIP), posted an impressive 7.3% growth during July compared to the same month of the previous year, according to the Ministry of Statistics and Programme Implementation. Within the manufacturing sector, 19 out of 23 industry groups recorded positive growth in July over the same month last year. The top three contributors were "Manufacture of motor vehicles" (22.2%), "Manufacture of electrical equipment" (28.3%), and "Manufacture of machinery and equipment" (12.1%). The manufacturing sector plays a key role in providing quality jobs to young graduates passing out from the country's engineering institutes and universities. According to The Times of India, the manufacturing sector has a weight of 76% in the index, and among the positive contributors were engineering (electric and non-electrical), automobiles (all kinds of transport), electronics, plastic and rubber products, beverages, wood, paper, and non-metallic minerals.
The electricity and gas supply sector recorded an 8.7% increase during July, while water supply, sewerage & waste management posted a 7.4% growth. However, the mining sector proved to be a laggard, posting a negative growth of (-) 0.9% during the month. Capital goods production recorded robust growth of 16.1% year-on-year, signalling continued strength in investment-related activity, up from 14.2% in June. Consumer durables production grew 10.5% year-on-year, indicating healthy momentum in demand for electronic goods, refrigerators, and TVs amid rising incomes, while consumer non-durables recorded much weaker growth of 1% during the month. Infrastructure and construction goods sector recorded a growth of 6.9%, driven by government's big-ticket investments in highways, ports and railway projects. According to The Times of India, intermediate goods also performed well at 10%, while tobacco products, apparel, chemicals, pharma were among the industries that lagged with negative growth.
For the first four months of the financial year 2026-27, the IIP growth stood at 6.3%, as compared to 4% in the previous financial year, indicating sustained industrial momentum. As per Bank of Baroda chief economist Madan Sabnavis, "The push given by govt to infra in the four months has forged strong backward linkages." The electricity and gas supply sector's robust 8.7% expansion was attributed to heat wave conditions, while newly added industrial activity group grew 7.4%. However, export markets were subdued for textiles and pharma, which could have affected growth due to renewed hostilities in West Asia, which threaten to disrupt supply chains. The IIP Growth in July 2025 was 5.4%, providing a clearer comparison baseline for the current data.
