India’s Industrial Output Grows 6.7% in July as Manufacturing, Capital Goods and Power Drive Expansion

India’s industrial economy maintained strong momentum in July 2026, with the Index of Industrial Production (IIP) expanding 6.7% year-on-year, supported by robust manufacturing activity, higher electricity generation and sharp growth in investment-linked capital goods.

The overall IIP stood at 124.8 in July 2026, compared with 117.0 in July 2025. Manufacturing, which carries the largest weight in the industrial index, expanded by 7.3%, while Electricity and Gas Supply grew by 8.7%. Water Supply, Sewerage and Waste Management recorded growth of 7.4%. Mining and Quarrying was the only major sector to contract, declining by 0.9%.

For the first four months of the current financial year, from April to July 2026, industrial production increased by 6.3% compared with the corresponding period a year earlier. Manufacturing output during the period grew by 7%, Electricity and Gas Supply by 8.7%, and Water Supply, Sewerage and Waste Management by 6.3%, partially offsetting a 1.1% decline in Mining and Quarrying.

Manufacturing Growth Spreads Across Industries

The July figures point to relatively broad-based momentum within manufacturing. Of the 23 manufacturing industry groups covered under the current classification, 19 recorded year-on-year growth.

Electrical equipment emerged as one of the strongest performers, recording growth of 28.3%. Production gains were particularly visible in equipment used for switching and protecting electrical circuits, including switchgear, circuit breakers and control panels, as well as UPS systems, solid-state drives and end-face connectors for optical fibres and cables.

The motor vehicles, trailers and semi-trailers industry grew 22.2%, supported by production of passenger cars, commercial vehicles, automobile components, spares and accessories. Machinery and equipment production increased by 12.1%, with construction machinery, pumps and turbines among the products contributing significantly to the expansion.

Other transport equipment also registered a strong 22% increase, while beverage production grew 21.9%. The distribution of growth across electrical machinery, vehicles, industrial equipment and transport-related manufacturing indicates that the July expansion extended well beyond a small group of consumer-oriented industries.

Capital Goods Surge 16.1%

One of the most significant features of the July data is the performance of capital goods, whose production jumped 16.1% year-on-year.

Capital goods include machinery and equipment used by businesses to expand or modernise productive capacity. Sustained growth in this category can therefore provide an important indication of investment activity across the industrial economy.

Capital-goods production has remained particularly strong during the opening months of 2026–27. Between April and July, the category expanded 15.4% over the same four-month period of the previous year.

Intermediate goods, which feed into subsequent stages of industrial production, grew 10% in July, while infrastructure and construction goods increased 6.9%. Consumer durables recorded a substantial 10.5% rise, and primary goods expanded 4.1%.

Consumer non-durables were the notable exception among the use-based categories, declining 1% year-on-year in July.

The combination of double-digit growth in capital goods, intermediate goods and consumer durables gives the July industrial numbers a stronger underlying profile than the headline IIP figure alone suggests. It points to simultaneous activity in investment-related manufacturing, industrial supply chains and segments linked to discretionary household consumption.

Electricity and Infrastructure-Related Activity Remain Firm

Electricity and Gas Supply recorded an overall increase of 8.7% in July. Electricity generation itself rose 9.3% year-on-year.

Within generation, output from non-renewable sources increased 12.5%, while renewable electricity generation grew 3.2%. Gas supply declined marginally by 1%.

Water Supply, Sewerage and Waste Management, which is separately represented under the new IIP series, increased 7.4%. Within this category, sewerage and waste-management activity expanded by 11.6%, while water supply increased 4.4%.

These sectors, together with strong production of construction machinery, electrical equipment and infrastructure goods, underline continuing industrial activity associated with infrastructure development and the wider build-out of productive capacity.

Mining Remains the Weak Spot

Mining and Quarrying continued to lag the rest of the industrial economy, with output declining 0.9% in July.

The weakness, however, was uneven across mining categories. Production of metallic minerals, including rare-earth minerals, increased 24.3%, while fuel minerals declined 1.3%. Non-metallic minerals, including minor minerals, contracted by 12.5%.

Mining output for April–July was consequently 1.1% below the corresponding period of 2025–26, making it the only broad industrial sector to record a cumulative contraction during the first four months of the financial year.

June Growth Revised Higher

The July release also provides an important revision to the preceding month’s industrial performance. June 2026 had initially been reported as recording 7.3% growth, but updated production data now place the June IIP at 124.8 against 114.7 a year earlier, implying final year-on-year growth of 8.8%.

The revision illustrates the provisional nature of the monthly quick estimates, which are subsequently updated as additional production information is received from reporting establishments and government agencies.

July’s 6.7% expansion therefore represents some moderation from the revised June performance, but industrial activity remains considerably stronger than during the opening months of the financial year.

New IIP Series Gives Broader Picture of Indian Industry

The latest numbers are part of India’s newly revised Index of Industrial Production series with 2022–23 as the base year, replacing the older 2011–12 series.

Introduced in June 2026, the revised framework was designed to reflect changes in the structure of Indian manufacturing and industrial activity more accurately. It incorporates an updated product basket, revised sectoral weights and expanded coverage of industrial activities.

Manufacturing now accounts for approximately 76.1% of the overall index, followed by Mining and Quarrying at around 11.1%, Electricity and Gas Supply at 10.9%, and Water Supply, Sewerage and Waste Management at about 2%. This means the continuing strength of manufacturing remains particularly important in determining the direction of the overall industrial index.

The new series also introduced important methodological changes. For industrial items whose production is collected in value terms, the statistical system has shifted to an Output Producer Price Index-based deflator rather than relying on the Wholesale Price Index. The change affects 234 of the 463 item groups in the IIP basket, representing just over 36% of the index weight.

Industrial Momentum Remains Broad-Based

Taken together, the July numbers present a picture of an industrial economy in which manufacturing and investment-linked production are providing much of the momentum.

The 6.7% headline expansion, 7.3% manufacturing growth and double-digit gains in capital goods, intermediate goods and consumer durables show that industrial growth is being supported by several distinct parts of the economy. Electrical equipment, automobiles and machinery have emerged as particularly important contributors.

At the same time, weakness in mining and the contraction in consumer non-durables remain areas to watch. Maintaining the present momentum will depend on whether the strength visible in machinery, infrastructure-linked industries, automobiles and electrical equipment can remain broad enough to offset weaker segments.

For the first four months of 2026–27, however, the cumulative 6.3% rise in industrial production, accompanied by 7% manufacturing growth and 15.4% expansion in capital goods, points to a firm start to the financial year for India’s industrial sector.

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