Industrial Output Expands by 7.3 % in June by CareEdge Ratings
Industrial output in India expanded by 7.3% YoY in June, up from 5% in the preceding month, supported by healthy performance across sectors, except mining and quarrying. The manufacturing sector recorded a strong growth of 7.8% in June vs 5.2% in the preceding month. Although the mining sector grew by a tepid 1% YoY in June, this was better compared to the contraction of 1.4% witnessed in May. 19 of the 23 manufacturing subsectors recorded output growth in June, with double-digit gains in electrical equipment (34%), motor vehicles, trailers and semi-trailers (17.5%), textiles (13.7%), food products (10.8%) and other non-metallic mineral products (12.9%), amongst others. In terms of the use-based classification, the output of capital goods expanded by 14.2% YoY, followed by intermediate goods (9.3%), consumer durables (7.7%), infrastructure/construction goods (7.5%), and primary goods (4.9%).
On a quarterly basis, IIP rose by a healthy 5.8% YoY in Q1 FY27. Electrical equipment and motor vehicles (including trailers and semi-trailers) were the major segments that witnessed strong growth of 25.8% and 15%, respectively. The contraction of 1.8% in the major segment of coke & refined petroleum products likely reflected the impact of measures implemented to curb the exports of petroleum products. From a use-based perspective, the healthy growth of 14% in output of capital goods in Q1 FY27 could reflect steady investment activity in the economy against an uncertain global backdrop. Growth in consumer durables picked up from 2.8% in Q1 FY26 to 7.1% in Q1 FY27, indicating the continuing impact of the GST rate rationalisation, particularly in segments like automobiles. However, consumer non-durables continued to post tepid growth.
Exhibit 1: Growth in Index of Industrial Production
Exhibit 2: Growth in Index of Industrial Production – Sectoral Exhibit 3: Growth in Index of Industrial Production – Use-Based Classification
Way Forward
Going forward, the uncertain global environment and high input prices will continue to pose a risk for the industrial sector. India’s external demand has shown resilience even amid global uncertainties, as reflected in a pick-up in goods exports in Q1 FY27. Another critical factor will be sustaining domestic demand amid a deficit monsoon and rising inflation. Rainfall deficit has narrowed markedly from 40% at the end of June to 15.8% as of July 28, 2026, but remains below normal. While it is still early to assess the impact of monsoon on rural demand, the improvement in kharif sowing over the last few weeks is a positive development. Overall, India’s industrial activity will need to navigate an increasingly uncertain external environment alongside emerging domestic challenges.
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