Manufacturing, consumer goods lift India's July IIP growth to 3.5%

IIP growth rose to 3.5% in July from 1.5% in June, driven by manufacturing, construction and consumer durables, though mining remained weak and electricity showed modest gains

Growth in industrial production rose to a four-month high of 3.5 per cent in July from 1.5 per cent in June, led by broad-based improvement across all sectors, according to data released by the National Statistics Office on Thursday.

 

The Index of Industrial Production (IIP) data showed that manufacturing output climbed to a six-month high of 5.4 per cent in July from 3.7 per cent in June, while electricity sector output turned positive (0.6 per cent) for the first time in three months.

 

Meanwhile, mining output contracted 7.2 per cent in July, remaining in negative territory for the fourth straight month.

 

 

“The performance of the mining and electricity sectors remained weak, even as the effect of heavy rains eased somewhat that month, weighing on overall IIP growth. Encouragingly, growth in manufacturing output accelerated, aided by construction inputs and consumer durables,” said Aditi Nayar, chief economist at Icra Ratings.

 

In July 2024, the IIP had grown 4.98 per cent. For the first four months of the current financial year (2025-26), IIP growth averaged 2.3 per cent, compared to 5.4 per cent in the corresponding period last year.

 

By use-based classification, all categories recorded modest to reasonable growth in July 2025, except for primary goods, where contraction persisted (minus 1.7 per cent). 

 

Driven by sustained government capital expenditure (capex), the construction goods sector was the standout performer, growing 11.9 per cent in July — a 21-month high. Capital goods output improved to 5 per cent in July from an eight-month low of 3 per cent in June, pointing to some pickup in investment activity. Intermediate goods output also accelerated, rising 5.8 per cent during the month.

 

“On the investment front, infrastructure and construction goods recorded healthy growth, underscoring the continued thrust from public sector capex. However, the absence of a strong pickup in private investment amid persistent global headwinds is weighing on the overall investment scenario,” said Rajani Sinha, chief economist at CareEdge Ratings.

 

On the demand side, consumer durables output grew 7.7 per cent in July — a seven-month high. Importantly, consumer non-durables registered growth of 0.5 per cent after five straight months of contraction.

 

Madan Sabnavis, chief economist at Bank of Baroda, said consumer goods continue to display a split trend, with durables showing high growth while non-durables remain subdued.

 

“This reflects what companies have been saying: urban demand has slowed, while rural demand has held up. Expected goods and services tax cuts should aid revival. Within durables, the automotive sector performed well, which is a good sign and could continue as the festival season approaches,” he added.

 

At the two-digit level, 12 of 23 sectors posted higher growth than overall industrial output in July 2025 — the most since August 2024, when 13 sectors outpaced total growth. These 12 sectors, with a combined weight of 41.6 per cent, included basic metals, fabricated metal products, electrical equipment, and other transport equipment, all of which recorded double-digit growth.