Garment workers cut fabric to make shirts at a textile factory of Texport Industries in Hindupur town in the southern state of Andhra Pradesh
Credit: Reuters Photo
New Delhi: India's industrial production growth rose to a four-month high of 3.5% in July, sharply higher from 1.5% in the previous month, driven by rebound in manufacturing activities, as per data released by the National Statistics Office on Thursday.
The factory output growth, measured by the Index of Industrial Production (IIP), was 5% in July 2024.
Manufacturing sector growth rose to 5.4% in July from 4.7% recorded in the same month last year. However, mining production dipped by 7.2% year-on-year. Power production growth slowed to 0.6% in July from 7.9% recorded in the same month last year.
Consumption-oriented sectors grew due to both domestic and export performance. Consumer durables improved markedly (7.7% vs 2.8%), driven by automobiles and electronic products.
Consumer non-durables saw only a smaller rise (0.5% vs -0.9%) as food products remained weak. The coming months could see some softening of these exports, weighed by higher US tariffs and from slower growth with trade partners.
"But an improvement in domestic consumption, particularly led by stronger rural demand, could provide some offset," said Dipti Deshpande, Principal Economist, Crisil.
On the use-based side, all the six categories recorded an improvement in their growth performance in July 2025 vis-à-vis June 2025, said Aditi Nayar, Chief Economist at ICRA.
The output for infrastructure/construction goods surged to a 21-month high of 11.9%, aided by robust growth in construction inputs such as cement and steel, suggesting that construction activity is likely to have remained strong in the month.
Besides, the growth in consumer durables output rose to a 7-month high of 7.7% in the month, likely aided by pre-festive stocking, in line with the pickup in growth of GST e-way bills.
Interestingly, capital goods output has risen by a healthy 8.6% during April-July 2025, supported by factors such as machinery exports and Government capex. The latter is likely to report a year-on-year slowdown in the months ahead, on last year's back-ended base. Moreover, the outlook for private capex activity remains lacklustre, owing to the heightened global uncertainty, particularly around the tariff-related developments and their impact on India’s exports.
Out of 23 sectors, 12 had a higher growth than the industrial output in July 2025, highest since August 2024 (13). The combined weight of these 12 sectors in July 2025 was 41.6% (June 2025: 46.2%). Sectors such as manufacture of basic metals, fabricated metal products, electrical equipment, other transport equipment, recorded double-digit output growth in July 2025, said Paras Jasrai, Associate Director, India Ratings and Research.