India's industrial production slows to 6.7 per cent in September

According to figures released by the National Statistics Office (NSO) on Wednesday, India's industrial activity, measured by the Index of Industrial Production (IIP), slowed to 6.7 per cent in the month of September. This level is the lowest in the last four months. This figure also fell short of the Bloomberg economists' survey estimates, which had projected a growth of approximately 7.3 per cent.

According to a report by Hindustan Times, this slowdown was observed across the board, with most sectors recording weaker growth in September compared to August. However, robust growth was seen in the consumer non-durables sector under the consumption-based classification. For the April-September 2026 period, IIP growth stood at 6.8 per cent, which is higher than the 4.4 per cent recorded in the same period last year.

In the activity-based classification, the manufacturing sector recorded 7.6 per cent growth in September, down from 8.6 per cent in August. According to Business Standard, manufacturing carries a weight of approximately 76 per cent in the IIP, and this decline was due to an unfavourable base. Out of 23 manufacturing groups, 17 groups recorded positive growth, with 8 groups showing double-digit growth. Key contributors to this growth include beverages (39%), electrical equipment (34%), rubber and plastic products (20%), transport equipment (19%), and motor vehicles, trailers and semi-trailers (19%).

The decline in the mining and quarrying sector increased to 6.2 per cent, up from 4.6 per cent in August. According to the new series (2022-23), this is the sector's largest decline. In the consumption-based classification, electricity and gas supply was the only sector to record double-digit growth of 11.3 per cent. This trend has been ongoing since May 2026, except for July when growth was 8.2 per cent. Growth in water supply, sewerage and waste management slowed to 5.9 per cent in September.

Under the consumption-based classification, growth in primary goods declined to 4 per cent in September from 4.2 per cent in August. Intermediate goods recorded 12.2 per cent growth in September, compared to 14.2 per cent in August. Consumer goods grew by 3.4 per cent, with consumer durables seeing 6 per cent growth and non-durables seeing 1.4 per cent growth. The largest decline was seen in capital goods, which fell to 10.4 per cent in September from 15.9 per cent in August. Infrastructure goods recorded 7.2 per cent growth.

Aditi Nair, Chief Economist at ICRA, stated that five out of six consumption-based segments, excluding consumer non-durables, saw a slowdown in growth in September 2026 compared to August. She further added that the production of capital goods and intermediate goods has been showing double-digit growth for the sixth and fifth consecutive months, respectively.

Expressing concern over future challenges, Rajni Sinha, Chief Economist at CareEdge Ratings, stated that geopolitical uncertainty, rising energy prices, supply-chain disruptions, and increased input costs could act as headwinds for industrial activity. Additionally, there are concerns regarding rural demand due to a weak South-West monsoon, which could pose a risk to agricultural production. Emerging inflationary pressures could reduce purchasing power and impact overall demand.