India's industrial output growth dips to 10-month low of 1.5% in June

Industrial production growth in June fell to a ten-month low of 1.5%, due to weak mining and electricity output, following a revision in May's growth figure, as per National Statistics Office data

Growth in industrial production fell to a ten-month low of 1.5 per cent in June from an upward revised figure of 1.9 per cent in May due to high base effect and a decline in the output of the mining and electricity sector, according to the data released by National Statistics Office (NSO) on Monday.

 

The index of industrial production (IIP) data showed that the output of the mining sector shrank by 8.7 per cent, a third straight month of contraction. The output in the electricity sector shrank for the second month in a row at 2.6 per cent. 

 

Output in the manufacturing sector, though revived to a three- month high of 3.9 per cent from an upward revised figure of 3.2 per cent in May. 

 

In June 2024, the IIP had grown by 4.93 per cent. For the first quarter of financial year 2026 (Q1FY26), the IIP stood at 2 per cent - an 11 quarter low as compared to 5.4 per cent in the corresponding quarter of the previous financial year. 

 

Aditi Nayar, chief economist, ICRA Ratings says that the excess rains in the second half of June are likely to have weighed on mining output, while also leading to a contraction in electricity generation, although the extent of the same narrowed compared to the previous month. 

 

“A marginal pickup in the manufacturing sector growth was more than offset by contraction in both the mining and electricity sector output. IIP growth has remained relatively subdued in the recent months,” said CareEdge Ratings chief economist Rajani Sinha. 

 

According to use-based classification, output in the infrastructure sector accelerated to 7.2 per cent during the month and output in the intermediate goods (5.5 per cent) also accelerated. Meanwhile, output in capital goods decelerated to 3.5 per cent.

 

“While private capex is yet to show meaningful traction, public capex continues to remain encouraging. However, persistent global uncertainties are weighing on the overall investment sentiment,” added Sinha. 

 

On the demand side, signals remained mixed as output of consumer non-durable goods continued to remain weak, staying in the contractionary zone (-0.4 per cent) for five consecutive months, while output of consumer durable goods accelerated to 2.9 per cent. 

 

“The positive effect of sustained decline in inflation and monetary easing since February 2025 is yet to reflect in output growth. The impact of decline in inflation, monetary easing and relatively good monsoon would be felt with a lag and industrial output may show signs of stable growth in the next couple of months,” said Devendra Pant, chief economist, India Ratings.

 

Echoing similar views, Sinha added that urban consumption, in particular, remains lagging. Nonetheless, consistent easing of inflation, a favourable monsoon, and recent policy rate cuts by the RBI are positives for the consumption scenario going forward. 

 

Output in the primary goods (-3 per cent) segment contracted for the third month in a row. 

 

At the two-digit level industrial classification, the number of sectors having positive growth in June rose to 14 from 12 in May. These included sectors like food products, tobacco, wearing apparel, wood products, rubber products, basic metals, electrical equipment among others.

 

Earlier this month, government data also showed that output growth in India’s eight core infrastructure industries remained subdued in June, even as it accelerated to a three-month-high at 1.7 per cent year-on-year, compared to a revised 1.2 per cent in May. 

 

Starting April 2025, IIP data is now being released on 28th of every month, thus bringing down the time lag from 42 days to 28 days from the reference month and also do away with the second revision of IIP.