July's industrial production hits 4-month high: Manufacturing, construction inputs lead; key highlights

India's Index of Industrial Production (IIP) growth accelerated to a four-month high of 3.5% in July 2025 from 1.5% in June 2025, led by a broad-based improvement across all the sectors, with a key boost from the manufacturing sector, according to the Ministry of Statistics & Programme Implementation data shared today.

Mining and electricity sectors lagged at -7.2% and 0.6%, but manufacturing growth accelerated to a 6-month high of 5.4% in July 2025 from 3.7% in June 2025, aided by construction inputs and consumer durables.

On the use-based side, all six categories, including primary goods, capital goods, intermediate goods, infrastructure, consumer durables, and consumer non-durables, recorded an improvement in their growth performance in July 2025 on a YoY basis.

"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," says Aditi Nayar, Chief Economist at ratings agency ICRA.

The growth in consumer non-durables is particularly notable, marking the first positive print after 5 consecutive months of contraction. However, analysts see that rural consumption has been holding up well, and urban consumption continues to lag, signalling uneven recovery.

On the investment front, infrastructure and construction goods recorded a healthy growth of 11.9% in July (Vs 6.7% in June). This shows the continued thrust from the public sector capex. "The absence of a strong pickup in private investment amid persistent global headwinds has been weighing on the overall investment scenario in the economy. The prospects of a favourable monsoon scenario, easing inflation, the ongoing monetary policy transmission of rate cuts and support to consumption from GST and income tax cuts remain supportive of the domestic economy," says Rajani Sinha, Chief Economist, CareEdge Ratings.

Key highlights:

1. The IIP growth rate for the month of July 2025 is 3.5%, which was 1.5% (quick estimate) in June 2025.

2. The growth rates of the three sectors, mining, manufacturing and electricity for July 2025 are (-) 7.2%, 5.4% and 0.6%, respectively.

3. Within manufacturing, 14 out of 23 industry groups have recorded a positive growth in July 2025 over July 2024. The top three are manufacture of basic metals (12.7%), manufacture of electrical equipment (15.9%), and manufacture of other non-metallic mineral products(9.5%).

4. 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.

5. 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.

The mixed outlook

The outlook for private capex activity remains lacklustre, says Nayar of ICRA, attributing it to the increasing global uncertainty. Specifically, the overall impact of the US tariffs on India's exports has posed uncertainty.

Looking ahead, experts say the RBI-led MPC's improved transmission of monetary easing and the upcoming GST rationalisation could help to shore up urban consumption sentiments. "This postponement of discretionary purchases, along with the disruptive monsoon rainfall in some regions over the last few weeks, could contain the IIP growth at sub-3% in August 2025," says Nayar.

Additionally, the easing inflation will also support consumption. "The interplay between the developments on the domestic and external front remains critical in shaping the overall industrial activity in the economy,” says Sinha.