India’s industrial output grew by 4.0% year-on-year in August 2025, signaling continued expansion but also revealing uneven economic momentum. While sectors like mining and infrastructure showed robust performance, weakness in consumer non-durables and a slowdown in manufacturing suggest that domestic demand remains fragile.
Sector-wise Performance Highlights
Overall Industrial Activity
- The Index of Industrial Production (IIP) rose by 4.0% in August, slightly below economist forecasts of 5%.
- July’s figure was revised upward to 4.3%, indicating some resilience in output despite broader concerns over demand and investment.
Breakdown by Sector
- Mining rebounded strongly, registering 6.0% growth after contracting 7.2% in July.
- Manufacturing, which forms the core of the IIP, grew 3.8%, slowing from 6.0% in July.
- Electricity output increased 4.1%, up from 3.7% in the previous month.
Use-Based Classification Trends
- Consumer durables grew by 3.5%, suggesting moderate demand in discretionary goods.
- Consumer non-durables declined sharply by 6.3%, a worrying sign for essential goods consumption.
- Capital goods rose 4.4%, lower than July’s 6.8%, pointing to sluggish private investment.
- Infrastructure/construction goods grew a strong 10.6%, reflecting increased public investment activity.
Monthly vs Cumulative Growth
- For the April–August period of FY 2025–26, industrial output grew 2.8%, a slowdown from 4.3% during the same period last year.
- This indicates a weaker start to the fiscal year, despite improvements in select sectors.
Interpreting the Data: Opportunities and Concerns
Strengths in Infrastructure and Mining
- The strong growth in mining and double-digit expansion in infrastructure goods suggest that government-led capital expenditure is providing a cushion.
- These sectors may continue to perform well, especially with upcoming festive demand and ongoing infrastructure projects.
Weakness in Manufacturing and Consumption
- The manufacturing sector’s slowdown and decline in consumer non-durables raise concerns about domestic consumption trends, particularly in rural and low-income households.
- This could reflect inflation fatigue or limited income recovery in certain segments of the population.
Investment Hesitancy
- While capital goods grew modestly, the slower pace compared to July implies that private sector investment remains cautious.
- Sustained economic growth will depend heavily on reviving private capex and improving business confidence.
Key Takeaways
- IIP growth in August 2025: 4.0%
- Mining sector: +6.0%
- Manufacturing sector: +3.8%
- Electricity: +4.1%
- Consumer non-durables: -6.3%
- Capital goods: +4.4%
- April–August FY26 growth: 2.8% vs 4.3% last year