Industrial output grows at 7.3% in June, a six-month high

India's industrial output, measured by the Index of Industrial Production (IIP), grew 7.3% year-on-year in June, a six-month high, led by a robust expansion in manufacturing, electricity and gas supply sectors and supported by moderate growth water supply and mining sectors and a favourable base effect, according to provisional data released by the ministry of statistics and programme implementation (MoSPI) on Tuesday.

The release marks the third month this fiscal year of the new IIP series with 2022-23 as the base year, which replaced the 2011-12 series. The new series aims to better reflect the evolving structure of India's industrial economy, emerging manufacturing segments and new infrastructure-related activities.

The June print was higher than the 1.5% growth recorded in June 2025 and the 5.1% expansion a month ago (now revised to 5% ), as per industrial output estimates, indicating a gradual strengthening in industrial activity.

The IIP stood at 123.1 in June 2026, compared with 114.7 a year ago, reflecting an overall improvement in output levels.

The IIP data is tracked closely as a high-frequency indicator of economic activity, and provides an early signal on manufacturing momentum, investment demand and overall growth trends in the economy.

Shashwat Singh, a fundamental analyst at Bajaj Broking, said, “The stronger-than-expected reading indicates that industrial growth gained traction at the end of the quarter despite ongoing global uncertainties. The June data comes against the backdrop of the government's recently introduced IIP series with 2022-23 as the base year, which incorporates the Output Producer Price Index in place of the earlier Wholesale Price Index for deflation purposes. This methodological shift enhances the accuracy of real output measurement by providing a more granular representation of producer prices and aligns India's industrial statistics with global best practices.”

Sectoral performance

High-frequency indicators pointed to an acceleration in manufacturing activity. Manufacturing, which accounts for the largest share (76.06%) in the IIP, grew 7.8% year-on-year in June, accelerating from 5.2% in May and significantly higher than 2.4% in June 2025, providing the main impetus to overall growth.

The expansion was relatively broad-based, with 19 of 23 industry groups within manufacturing recording positive growth. Key contributors included manufacture of electrical equipment (34.0%), motor vehicles, trailers and semi-trailers (17.5%), manufacture of food products (10.8%). The expansion was also supported by higher production of textiles, paper and paper products; manufacturing of computer, electronic and optical products; and manufacturing of other non-metallic mineral products.

Mining and quarrying output rose by mere 1% year-on-year in June, improving from negative 1.4% in May but falling from 4.1% growth in May 2025, indicating a slow pick up in extraction activity. Electricity generation and gas supply increased 10.6% during the month, improving from 10.3% growth in May and much better than negative 2% in the year-ago period, pointing to higher growth in power demand. Water supply, sewerage and water management grew 6.1% in June.

Use-based classification data showed a mixed but largely positive trend, with capital goods output rising sharply by 14.2%, signalling improving investment activity, while infrastructure and construction goods grew 7.5%, intermediate goods expanded 9.3%, and consumer durables increased 7.7%.

In contrast, primary goods and consumer non-durables posted modest 4.9% growth each, reflecting some weakness in mass consumption demand. Overall, infrastructure goods, intermediate goods and capital goods emerged as the key drivers of industrial growth during the month.

The output of India's nine core industries, which account for nearly 33% of the weight of the Index of Industrial Production, rose to a five-month high of 5% in June from 3.2% in May. Earlier this month, the commerce ministry released the revised Index of Core Industries under the new series with FY23 as the base year. The new series tracks production of nine core industries compared with eight in the previous series.

The June IIP data suggest a gradual but uneven recovery in industrial activity, with manufacturing and investment-linked sectors gaining traction even as consumption trends remain mixed.

Aditi Nayar, chief economist at ICRA Ltd, said, “While capital goods expanded by double digits for the third consecutive month in June 2026, infra/construction goods output rose by a healthy 7.5% in the month. This suggests investment activity remained robust in the month, benefitting from the easing of tensions in West Asia as well as the large rainfall deficit seen in June that offered extended periods for activity.” She added, “While higher volume growth augurs well, margin compression owing to higher input costs is expected to constrain industrial GVA growth in the quarter.”

Base year revision

The IIP’s shift to 2022-23 marked its 10th base-year revision. The first IIP was prepared with base year 1937, and was subsequently revised to 1946, 1951, 1956, 1960, 1970, 1980-81, 1993-94, 2004-05 and 2011-12.

The revised index expands coverage beyond the traditional sectors of mining, manufacturing and electricity to include gas supply, water supply, sewerage and waste management activities. The mining and quarrying component has been broadened to include minor minerals and rare earth minerals. It has also been split into dedicated indices for fuel minerals, metallic minerals and non-metallic minerals.

The energy basket includes separate tracking of renewable and non-renewable electricity generation, allowing policymakers to better monitor India's evolving energy mix.

According to the statistics ministry, the new series comprises 463 item groups (1,042 mapped products), compared with 407 in the previous series, including 120 newly added products such as CCTV cameras, stents, aircraft and spacecraft parts, magnetic stripe cards, articles of non-woven textiles and vaccines. Meanwhile, 64 outdated products including kerosene, CFL lamps, printing machines, sewing machines and certain tyre tubes have been dropped from the basket.

However, the six use-based categories—primary goods, capital goods, intermediate goods, infrastructure/construction goods, consumer durable goods and consumer non-durable goods—are unchanged from the 2011-12 series.

The data has been made more representative by excluding permanently shut factories and including operating units and inducting newly commissioned large factories.

The revised series uses 2022-23 gross value added and output data to derive weights and adopts the latest National Industrial Classification (NIC) 2025 for dissemination. The ministry will also release sectoral linking factors to enable comparison between the old and new series.