India's Industrial Production Holds Steady at 4% in September, Driven by Manufacturing

India's industrial production showed resilience, with the Index of Industrial Production (IIP) growing at a steady 4% in September 2025, a slight improvement from the 3.2% recorded in the same month last year. The National Statistics Office (NSO) also revised August 2025's growth figure upwards to 4.1%. For the first half of the fiscal year 2026 (April-September), overall industrial output grew 3%, which is lower than the 4.1% seen in the same period of FY25.

Key sectors showed mixed performance. Manufacturing output was a strong driver, expanding by 4.8% compared to 4% last year. Power generation also improved significantly, increasing by 3.1% from 0.5% a year ago. However, mining production contracted by 0.4%, a reversal from the modest 0.2% growth in September 2024.

Analysis suggests that stocking ahead of potential Goods and Services Tax (GST) rationalization and early festive season demand supported manufacturing. Capital goods output grew by 4.7%, and consumer durables surged by 10.2%, indicating investment and demand strength. Infrastructure and construction goods also saw robust growth at 10.5%. Conversely, consumer non-durables fell by 2.9%. Growth in India’s eight core industries slowed to 3% in September from 6.5% in August, though steel and cement production remained strong.

Impact: This steady growth, particularly in manufacturing and capital goods, is positive for investor sentiment, suggesting underlying economic strength despite some sectoral weaknesses. It could support the performance of companies in these sectors. However, the slower growth in the first half of the fiscal year and mining contraction warrant monitoring. Rating: 6/10.

Heading: Difficult Terms Index of Industrial Production (IIP): A measure that shows the short-term changes in the volume of production in the industrial sector of an economy. FY26: Fiscal Year 2025-2026. GST: Goods and Services Tax, an indirect tax levied on the supply of goods and services. Capital Goods: Goods such as machinery and equipment used to produce other goods. Consumer Durables: Goods that are durable or long-lasting, such as refrigerators and cars. Consumer Non-durables: Goods that are consumed quickly, such as food and beverages. Core Industries: A group of eight key industries that form the backbone of the Indian economy, including coal, crude oil, natural gas, petroleum refinery products, fertilizers, steel, cement, and electricity. Use-based classification: A method of classifying industrial production based on the end-use of the goods produced (e.g., basic goods, capital goods, intermediate goods, consumer goods).