India's industrial production delivered a strong performance in June, with industrial output expanding 7.3 per cent against a revised 5 per cent in May, according to the latest data from the National Statistics Office (NSO). The manufacturing sector led this growth with 7.8 per cent expansion, while capital-goods output rose 14.2 per cent, indicating robust investment activity across the economy. Within manufacturing, 19 of 23 industry groups recorded positive growth, with electrical equipment leading the surge at 34 per cent growth, powered by strong demand for switchgear, circuit breakers, UPS systems and meter panels. Motor vehicles, trailers and semi-trailers followed with 17.5 per cent growth, driven by auto components, passenger cars and commercial vehicles, while textiles grew at almost 14 per cent. This represents the fastest industrial growth pace in nearly two years, signaling strengthened manufacturing momentum and investment confidence. As per Finance MoS Pankaj Chaudhary, the growth in the Index of Industrial Production (IIP) has improved from 3.0 per cent in March 2026 to 7.3 per cent in June 2026, with core industries strengthening from 2.9 per cent to 5.0 per cent during the same period.
The services sector demonstrated strong performance across multiple segments in May, with 16 of 19 services subsectors recording growth under the experimental Index of Services Production, as reported by Business Standard. Accommodation and food services led this expansion with 27.4 per cent growth, followed by real estate, retail trade and banking sectors. This broad-based services growth indicates healthy consumer demand and business activity across various service-oriented industries.
The power sector delivered exceptional performance with electricity and gas supply posting a 10.6 per cent expansion, according to the latest government data. Within electricity generation, renewable sources grew 7.3 per cent while non-renewable sources expanded 13 per cent. Water supply, sewerage and waste management also showed strong growth at 6.1 per cent, while infrastructure and construction goods expanded 7.5 per cent. As per ICRA's chief economist Aditi Nayar, this suggests investment activity remained robust in June, benefiting from the easing of tensions in West Asia and the large rainfall deficit that offered an extended period for activity. Consumer durables rose 7.7 per cent, though consumer non-durables grew a comparatively modest 4.9 per cent, while primary goods output increased 4.9 per cent.
For the April-June quarter of FY27, industrial production grew 5.8 per cent compared to 3.4 per cent in the same period last year, with manufacturing up 6.3 per cent and electricity and gas supply climbing 8.6 per cent aided by elevated temperatures and a delayed monsoon onset. However, mining output contracted 1.4 per cent during the quarter. The quarterly performance was supported by strong demand across multiple sectors, with the manufacturing surge driven by electrical equipment, automotive components, and capital goods. The government's focus on infrastructure and development spending, including the release of ₹1.09 lakh crore to states ahead of schedule, has contributed to the robust investment activity observed in the manufacturing sector. As per Finance MoS Pankaj Chaudhary, these robust domestic fundamentals are expected to support the economy's growth momentum during the year, with average CPI inflation remaining moderate at 3.9 per cent during April-June 2026.
The government acknowledged that the global economic environment has remained volatile amid the conflict in West Asia, which has caused heightened trade uncertainties. Brent crude oil prices had climbed to a peak of $138.2 per barrel in April, pushing up global energy prices and domestic producer inflation, but crude prices had eased to $91.8 per barrel by July 27. Energy-intensive and trade-dependent sectors such as petrochemicals, chemicals, plastics, packaging, textiles, pharmaceuticals, automotive components and other manufacturing industries are relatively more vulnerable to external shocks from energy price volatility. To strengthen the economy's resilience, the government has implemented measures including customs duty exemptions on selected petrochemical feedstock, operationalisation of the Bharat Maritime Insurance Pool, Emergency Credit Line Guarantee Scheme (ECLGS 5.0), the Resilience & Logistics Intervention for Export Facilitation (RELIEF) scheme, restoration of the Remission of Duties and Taxes on Exported Products (RoDTEP), expansion of free trade agreements, and diversification of crude oil import sources. Additionally, a weaker monsoon due to the El Niño effect remains a key risk, with all-India cumulative southwest monsoon rainfall as of July 31 standing at 14 per cent below the Long Period Average.
