In the industry group “Manufacture of motor vehicles, trailers and semi-trailers”, item groups “Auto Components, Spares and Accessories”, “Passenger Cars”, and “Commercial Vehicles” have shown significant contribution in growth.
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SAHIBA CHAWDHARY
India’s industrial output expansion eased to 6.7 per cent in July, down from 7.3 per cent in June, even as manufacturing held firm. Analysts suggest overall growth could hit 8 per cent this fiscal, contingent on a strong festive season rebound.
According to the National Statistics Office, the July headline number was “supported by 7.3 per cent growth in the manufacturing sector and strong growth of 8.7 per cent in the Electricity and Gas Supply sector.” The data showed that the mining and quarrying sector contracted by 0.9 per cent in July against 10.7 per cent growth a year ago. In the manufacturing sector, 19 out of 23 industry groups have recorded a positive year-on-year growth in July 2026
“July IIP data confirms that growth momentum in the economy remains strong,” said Rajni Thakur, Chief Economist, L&T Finance. Further, she highlighted that 16 per cent growth in capital goods production, 10 per cent growth in intermediate goods, and 11 per cent growth in consumer durables production reflect a broad-based strength in industrial activities in the country.”
Rajeev Sharan, Head of Research, Brickwork Ratings, noted that consumer durables, the big-ticket items such as vehicles and appliances, grew 10.5 per cent, while everyday goods such as food and toiletries fell 1 per cent. The same split runs through factory output, with motor vehicles up 22.2 per cent and electrical equipment up 28.3 per cent, against 2.6 per cent for food products and a 0.6 per cent fall in clothing. “This suggests discretionary and credit-linked purchases remain strong, while everyday items, more closely tied to rural incomes and real wages, remain weak,” he said.
Growth in the coming months will depend on festive demand. Madan Sabnavis, Chief Economist of Bank of Baroda, stated that for the four months, growth has been driven by manufacturing at 7 per cent and electricity at 8.7 per cent. However, the mining sector was depressed at -1.1 per cent, which can be attributed partly to the monsoon effect. Interestingly, the rare earths category registered growth of over 20 per cent, though from a small base. “For the year ahead, IIP growth could be in the region of 7-8 per cent,” he said, “especially if the festival demand is retained this year as it was last year.”
Published on August 28, 2026
