IIP growth slows to a three-month low of 4% in September

Industrial production for September

India’s industrial activity moderated slightly in September, expanding 4 percent year-on-year, the slowest pace in three months, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI) on October 28. The slowdown follows a 4.12 percent rise in August.

"Buoyed by stocking ahead of the GST-rationalisation fuelled demand during the festive season, the IIP growth for the month of September 2025 remained steady at 4%, shrugging off the slowdown seen in the core sector growth. The expansion in manufacturing output accelerated to 4.8% in September 2025 from 3.8% in August 2025, despite an adverse base, even as the mining and electricity segments witnessed a deterioration in their YoY growth performance between these months," said Aditi Nayar, chief economist, ICRA.

The weaker print can be attributed to a contraction in mining sector, impacted by heavy rains in parts of the country and a slowdown in electricity sector, even as manufacturing expansion gathered pace.

The mining sector growth fell to -0.4 percent compared with 6.6 percent in the previous month, electricity slowed down top 3.1 percent from 4.1 percent in august, while manufacturing rose to 4.8 percent from 3.8 percent earlier.

The trend is consistent with the softening seen in core sector output, which accounts for 40 percent of the Index of Industrial Production (IIP). Data from the Ministry of Commerce and Industry showed that the eight core industries grew just 3 percent in September, compared with 6.5 percent in August, as weaker output in refinery products, natural gas, and crude oil outweighed gains in steel and cement.

Among individual sectors, steel production rose 14.1 percent and cement output increased 5.3 percent, reflecting ongoing strength in infrastructure spending. However, refinery output contracted 3.7 percent, natural gas fell 3.8 percent, and crude oil declined 1.3 percent, highlighting continued weakness in energy production.

Infrastructure was the fastest growing segment within use-based industries, as the sector expanded 10.5 percent compared with 10.4 percent in August. Consumer durables growth picked up during the festive season as well, rising 10.2 percent compared with 3.5 percent the previous month, but non durables remained in red for a second consecutive month at -2.9 percent from -6.4 percent.

Economists expect October to post better numbers.

"Overall, the combination of GST rate rejig, pent-up demand and the early festive onset appears to have boosted demand in September-October 2025, which is expected to augur well for the growth in manufacturing output in October 2025 as well. While the GST rationalisation may support demand for regular use/smaller ticket items post the festive season, the sustenance of the buoyancy in demand for big-ticket items remains to be seen," said Nayar.