India’s industrial output growth measured by Index of Industrial Production (IIP) slumped to 6.7% in September from 8% in August, primarily due to contraction in mining output, according to data released by the Ministry of Statistics and Programme Implementation on Wednesday.
Manufacturing output grew 7.6%, while electricity and gas supply expanded 11.2%. Mining and quarrying, however, contracted by 6.2% leading to the fall in the overall industrial output. Water supply, sewerage and waste management grew 5.8%. The overall IIP stood at 124.3 in September, compared with 116.5 in the same month last year.
“Manufacturing activity in the first half remained buoyant, led by automobiles, machinery and equipment, textiles, food products, and computer and electronic products. The automobile sector, in particular, benefitted from healthy demand across both rural and urban markets. Electricity generation grew on the back of higher power demand, driven by deficient rainfall and elevated temperatures amid evolving El Niño conditions,” said Dipti Deshpande, Senior Director and Principal Economist, Crisil.
In the manufacturing sector, 17 of the 23 industry groups recorded a double-digit positive growth during the month. Electrical equipment manufacturing led the expansion, growing 33.9%, followed by rubber and plastics products at 19.9%and motor vehicles, trailers and semi-trailers at 19%.
Growth in the automobile segment has been driven by auto components, spares and accessories, passenger cars and commercial vehicles. Consumer durables output rose by 6%, whereas consumer non-durables grew at a more modest 1.4%, indicating a relatively subdued expansion in the latter category. However, economist cautioned that rising input cost pressures stemming from prolonged geopolitical tensions could increasingly be passed on to consumers, leading to higher retail prices and softer demand. In addition, persistent trade disruptions may weigh on export-oriented manufacturers, although favourable pricing trends continue to support some key sectors for now.