IIP growth eases to 4-month low in September as mining output contracts
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September witnessed a decline in India's factory output growth, falling to 6.7%, the lowest rate observed in four months. The drop is largely linked to a high base effect and decreased mining activity. Despite this, manufacturing output surged by 7.6% compared to the previous year, while electricity generation also grew, spurred by robust demand even with insufficient rainfall. Economists anticipate GDP growth to surpass 7% for the July-September period.
New Delhi: India's factory output growth eased to a four-month low of 6.7% in September, weighed down by a high base effect and softening mining output, even as manufacturing and power generation continued to support overall industrial activity.The September print marks the sixth monthly Index of Industrial Production (IIP) reading based on the revised 2022-23 base year series. Industrial output expanded 7.8% in August and 6.1% in September 2025.
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"Base effect and negative growth in the mining sector pulled down September growth," said Devendra Pant, chief economist, India Ratings and Research (Ind-Ra).
Despite the monthly slowdown, industrial production growth rose to 7.3% in Q2FY27 from 6.2% in Q1, raising expectations of GDP growth exceeding 7% in the July-September quarter.
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"With robust IIP growth in Q2 complimenting the strength visible across high frequency indicators, we anticipate GDP (gross domestic product) growth to exceed 7% in Q2FY27," said Aditi Nayar, chief economist, ICRA.
Growth stood at 7.8% in the June quarter.
Manufacturing, Power Generation
Manufacturing, which accounts for 76.1% of the index, rose 7.6% year-on-year in September, slowing from 8.6% in the previous month. Growth was supported by motor vehicles, trailers and semi-trailers production (19%), electrical equipment (33.9%), and rubber and plastics products (19.9%). Of the 23 industry groups, 17 registered positive growth during the month.Also Read: India in striking distance of 8% growth as reforms boost economy: Shaktikanta Das
Electricity & gas supply expanded 11.2% year-on-year in September compared with 12.3% in August. Electricity generation grew 12.6% in September, while gas supply contracted 6.7%. Strong electricity demand amid deficient rainfall supported power generation.
Electricity generation from non-renewable sources grew at 16.5% in September compared with renewable sources growth at 4.3%.
Water supply, sewage and waste management grew 5.8% year-on-year in September, down from 6.3% in August. Mining and quarrying, meanwhile, contracted 6.2% compared with a decline of 4.6% in the month before.
"Mining output contracted steeply in September led by the non-metallic minerals segment," said Nayar.
Use-Based Categories
Among the six use-based categories, only consumer non-durables registered higher year-on-year growth in September compared to August.Consumer non-durables output grew 1.4% in September after contracting 1.1% in August. In contrast, consumer durables growth slowed to 6% from 10.5%.
"The coming months are the festival and wedding seasons and should witness buoyancy, which should feed back into higher demand," said Madan Sabnavis, Chief Economist, Bank of Baroda.
However, Ind-Ra's Pant said deficient rainfall, high crude prices and calibrated tightening are likely to impact consumer demand in the economy.
Although growth in capital goods and intermediate goods moderated in September from the previous month, both categories continued to register double-digit expansion.
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Figures reflect the source report and its stated period. This article is for information and is not investment advice.
