Amid a slew of negative economic indicators, India’s industrial sector provided a pleasant surprise on Monday, with industrial production growth accelerating to 8% in August 2026 from 6.7% in July, driven primarily by manufacturing and electricity generation, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI).
Manufacturing output grew 9% in August, while electricity generation rose 12.3%. Mining and quarrying, however, contracted 5.6% during the month. Water supply, sewerage and waste management recorded growth of 6.3%.
“We expect the growth to moderate somewhat in the second half of this fiscal as the cumulative impact of elevated costs, higher interest rates and softer global demand begins to weigh on economic activity,” said Dipti Deshpande, Principal Economist, Crisil.
Among the major manufacturing segments, electrical equipment output grew 30.9%, followed by other transport equipment at 25.3% and motor vehicles, trailers and semi-trailers at 25.2%.
However, several manufacturing segments remained under pressure. Wearing apparel output contracted 7.4%, tobacco products fell 8%, while coke and refined petroleum products and chemicals declined 0.6% and 0.5%, respectively.
The increase in motor vehicle production was driven by higher output of auto components, passenger cars and commercial vehicles.
Despite the strong industrial output numbers, economists cautioned that economic growth could moderate to 7% this fiscal from 7.8% last fiscal, amid the ongoing West Asia crisis.
“The ongoing conflict in West Asia has resulted in a sharp increase in crude oil prices and other industrial input costs, which could pressure both industrial production and corporate profitability. At the same time, global growth prospects have become less supportive,” Deshpande said.
“On the domestic front, monsoon-related risks have materialised and could weigh on agricultural output and rural incomes,” she added. Government capital expenditure is expected to continue supporting investment activity, while state-level cash transfer programmes could cushion the impact on lower-income households.
Among use-based categories, capital goods output rose 16.9%, intermediate goods 13.7% and consumer durables 11.1%. Infrastructure and construction goods grew 6.4%.
Primary goods and consumer non-durables recorded relatively slower growth of 3.5% and 2.1%, respectively.