India’s Factory Output Growth Moderates to 6.7% in September 2026

India’s industrial production growth moderated to 6.7 per cent year-on-year in September 2026, according to government data released on Wednesday. The Index of Industrial Production (IIP) had expanded by 7.8 per cent in August, which was initially recorded at 8 per cent as a quick estimate by the National Statistics Office (NSO).

For the first half of the fiscal year, overall IIP growth stood at 6.8 per cent, the NSO data shows. Calculations for the current series are based on a new base year of 2022-23, which came into effect in April.

The September moderation was mainly driven by a contraction in mining activity and sluggishness in manufacturing. The mining and quarrying sector contracted by 6.2 per cent in September, worsening from a 4.6 per cent decline in August. Meanwhile, growth in electricity and gas supply, as well as water supply, sewerage, and waste management, also turned sluggish compared to the preceding month.

Despite the slowdown, the manufacturing sector—which holds nearly 76 per cent weight in the index—expanded by 7.6 per cent in September, though down from 8.6 per cent in August. Within manufacturing, 17 out of 23 industry groups recorded positive growth during the month. The top three positive contributors were the manufacture of motor vehicles, trailers and semi-trailers; electrical equipment; and rubber and plastics products.

According to use-based classification, growth in September was recorded at 4 per cent for primary goods, 10.4 per cent for capital goods, 12.2 per cent for intermediate goods, 7.2 per namespace per cent for infrastructure and construction goods, 6 per cent for consumer durables, and 1.4 per cent for consumer non-durables. The top three positive contributors to the overall index growth were intermediate goods, primary goods, and capital goods.

Industry experts have pointed to multiple factors influencing the September print. Ranen Banerjee, Partner and Leader for Economic Advisory at PwC India, noted that the contraction in mining along with moderation in consumer durables and capital goods output impacted growth. He added that higher output in August—driven by anticipation of festive sales and a high base effect—along with nervousness regarding rising inflation affecting demand, influenced production planning.

Dipti Deshpande, Senior Director and Principal Economist at Crisil, stated that industrial production remained robust despite the easing, attributing the moderation largely to a statistical high-base effect alongside sequential softening in mining and electricity output. Devendra Pant, Chief Economist at India Ratings and Research (Ind-Ra), concurred that the base effect and negative mining growth pulled down the September figures, while projecting that IIP growth could improve to 8–9 per cent in October 2026 due to favorable base effects in the overall index, particularly for manufacturing and electricity.

"The moderation in India's factory output growth to 6.7 per cent in September highlights the cyclical nature of industrial production, particularly when influenced by high-base effects and festive inventory cycles. While the contraction in mining and softening in certain consumer segments present near-term headwinds, the underlying expansion in manufacturing and capital goods points to ongoing foundational resilience. Businesses and manufacturing startups must closely monitor demand patterns and inflation trends as they plan their supply chains and production targets for the coming quarters." — Dr. Shishir Gupta, Founder & CEO, StartupLanes