Morgan Stanley On India IIP Growth: India's industrial activity showed a sharp rebound in August, with factory output growth accelerating to 8% from 6.7% in July. Morgan Stanley said the improvement reversed the monsoon-related softness seen in July and pointed to a strengthening industrial cycle.
Within manufacturing, 18 of 23 industry groups recorded positive growth, led by electrical equipment, motor vehicles, trailers and other transport equipment, according to Morgan Stanley's assessment of the August IIP data.
The brokerage also highlighted resilience in other high-frequency indicators, including industry credit growth, capital goods and infrastructure-related activity, suggesting that the improvement in industrial activity was not limited to the headline IIP number.
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Morgan Stanley expects private capital expenditure to gather pace in the coming quarters, supported by resilient domestic demand, improving capacity utilisation and continued policy support. The brokerage's assessment comes as the latest IIP data points to broader momentum across manufacturing and investment-linked segments.
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IIP Growth August 2026
India's industrial production growth accelerated to 8% in August 2026, compared with 6.7% in July, as manufacturing activity strengthened and electricity generation recorded double-digit growth, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI).
The Index of Industrial Production (IIP) rose to 123.3 in August, compared with 114.2 a year earlier. Manufacturing, which carries the largest weight in the index, grew 9%, while electricity and gas supply expanded 12.3%. Water supply, sewerage and waste management increased 6.3%.
The August data marked the third consecutive month of manufacturing growth at or above 8%, indicating sustained momentum across several industrial segments.
Mining and quarrying, however, remained a drag on overall industrial production, contracting 5.6% in August after expanding 10.7% in July.
Manufacturing Growth
Within manufacturing, 18 of the 23 industry groups recorded year-on-year growth in August.
Electrical equipment production posted the strongest growth at 30.9%, followed by other transport equipment at 25.3% and motor vehicles, trailers and semi-trailers at 25.2%.
The automobile sector's growth was supported by higher production of auto components, passenger cars and commercial vehicles, according to the ministry. In electrical equipment, switching and circuit-protection equipment, optical-fibre connectors, UPS systems and solid-state drives contributed to growth.
Production of other transport equipment was supported by two-wheelers, railway rolling stock and related parts and accessories.
Several other manufacturing segments also recorded strong growth. Computer, electronic and optical products rose 19.3%, rubber and plastics products increased 21.4%, fabricated metal products grew 16.9%, while machinery and equipment expanded 10.3%.
On the other hand, tobacco products contracted 8%, while wearing apparel declined 7.4%. Production of chemicals and chemical products fell 0.5%, while coke and refined petroleum products declined 0.6%.
Electricity, Capital Goods Drive IIP
The electricity and gas sector recorded 12.3% growth, led by a 13.3% rise in electricity generation. Renewable electricity generation increased 15.4%, while non-renewable generation grew 12.3%. Gas supply, however, declined 2.4%.
The use-based classification also showed broad-based growth. Capital goods surged 16.9%, while intermediate goods rose 13.7%. Consumer durables increased 11.1% and infrastructure and construction goods grew 6.4%.
Primary goods recorded more modest growth of 3.5%, while consumer non-durables rose 2.1%.
For the April-August period, overall IIP growth stood at 6.7%, compared with 4.2% in the corresponding period a year earlier. Manufacturing grew 7.4% during the period, while electricity and gas supply expanded 9.5%.
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