Industrial activity is expected to remain steady in the coming months, supported by robust government capex, easing inflation, and the positive impact of GST rationalization on consumer demand. Investment-driven sectors are likely to sustain their momentum, while consumer goods may see a gradual improvement as rural demand recovers. Some pressure from weak exports and global trade frictions may persist, but the overall industrial outlook remains stable.
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Motilal Oswal Report
In September 2025, Index of Industrial Production growth remained almost unchanged at 4% YoY vs Aug’25, led by the manufacturing sector. Electricity and mining output contracted (due to monsoon).
IIP performed better than expectations in Sep’25, despite the seasonally weak Shraadh period and ongoing tariff-related uncertainty weighing on external demand.
Manufacturing output grew 4.8% in Sep'25, higher than 3.8% YoY in Aug’25. The details of the manufacturing sector suggest that 33% of the sub-sectors contracted in Sep’25, lower than 44% in Aug’25.
Among manufacturing segments, 13 out of 23 industry groups recorded an increase in output, with the highest growth seen in the manufacture of basic metals, followed by electrical equipment and motor vehicles, trailers, and semi-trailers.
Among export-oriented segments, textiles grew 1.2% in Sep'25 after posting two consecutive contractions in Aug’25 and Jul’25. Leather and related products grew 2.1% in Sep’25, marking the first expansion after 12 months. However, wearing apparel contracted.
On a use-based classification, investment goods output remained robust, reflecting sustained capex momentum. In contrast, consumer goods output showed a mixed trend, with a recovery from previous contractions.
Notably, consumer durables output grew at a 10-month high of 10.5% YoY in Sep’25 (while consumer non-durables output continued to contract), aided by GST rationalization measures and a demand boost driven by the festive season.
IIP growth picked up in recent months, with Q2 FY26 growth at 4.1%, higher than 2% in Q1 FY26.
Industrial activity is expected to remain steady in the coming months, supported by robust government capex, easing inflation, and the positive impact of GST rationalization on consumer demand.
Investment-driven sectors are likely to sustain their momentum, while consumer goods may see a gradual improvement as rural demand recovers.
Some pressure from weak exports and global trade frictions may persist, but the overall industrial outlook remains stable.
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