India’s industrial sector has delivered a stunning performance in July 2025, with official data revealing a year-on-year growth of 35% in overall industrial output—far exceeding Reuters’ forecast of just 2.1%. Even more striking is the 54% year-on-year jump in manufacturing output, signaling a powerful rebound in factory activity and a renewed momentum in the country’s economic engine.
The data, released by the Ministry of Statistics and Programme Implementation (MoSPI), paints a picture of robust expansion across key industrial segments, despite global headwinds and domestic challenges. The Index of Industrial Production (IIP), which tracks the performance of mining, manufacturing, and electricity sectors, showed a sharp uptick from June’s modest 1.5% growth to 3.5% in July, driven primarily by manufacturing gains2.
Sectoral Breakdown: Manufacturing Leads the Charge
Manufacturing, which accounts for nearly 77% of the IIP, grew by 5.4% month-on-month and a staggering 54% year-on-year, according to government figures. This surge was led by strong performances in:
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Basic metals: +12.7%
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Electrical equipment: +15.9%
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Non-metallic mineral products: +9.5%
Out of 23 industry groups, 14 recorded positive growth, indicating broad-based recovery. Use-based classification data also showed strong momentum in:
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Infrastructure/construction goods: +11.9%
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Consumer durables: +7.7%
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Intermediate goods: +5.8%
These figures suggest that both investment-led and consumption-driven demand are contributing to the industrial revival.
April–July Snapshot: Steady Gains Despite Global Uncertainty
For the April–July period of FY26, India’s industrial output rose by 2.3% year-on-year, a modest but steady increase compared to the same period last year. While mining and electricity sectors showed mixed results, manufacturing remained the backbone of growth.
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Mining: Contracted by 7.2% in July
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Electricity: Marginal growth of 0.6%2
This divergence highlights the need for targeted policy support in energy and resource extraction, even as manufacturing continues to thrive.
Global Context: India Outpaces Peers
India’s industrial performance stands out in a global landscape marked by sluggish growth and trade tensions. The OECD has projected a slowdown in global growth from 3.3% in 2024 to 2.9% in 2025, yet India continues to defy the trend.
The country’s Purchasing Managers’ Index (PMI) for manufacturing hit a 14-month high of 59.1 in July, while the composite PMI remained above 60, signaling robust expansion across sectors.
Policy Implications: A Case for Optimism
The sharp rise in manufacturing output is likely to bolster confidence in the government’s “Make in India 2.0” initiative, which aims to increase the sector’s share in GDP to 25% by 2025. With capital expenditure growing by over 54% in the first two months of FY26, the government appears committed to sustaining this momentum.
Moreover, the record-low inflation of 1.55% in July has given the Reserve Bank of India room to maintain accommodative monetary policy, supporting industrial growth without overheating the economy.
Challenges Ahead: Mining and Power Sectors Lag
Despite the upbeat manufacturing data, the contraction in mining and the tepid growth in electricity generation raise concerns about supply-side bottlenecks. These sectors are critical for sustaining industrial expansion, and their underperformance could pose risks if not addressed through infrastructure upgrades and policy reforms.
Outlook: Industrial Resilience Amid Global Flux
India’s July industrial data marks a turning point in its post-pandemic recovery narrative. The unexpected surge in manufacturing output and the overall IIP growth far above forecasts suggest that the country is well-positioned to weather external shocks and maintain its status as one of the fastest-growing major economies.
With strong domestic demand, favorable inflation trends, and government-backed infrastructure spending, the industrial sector may continue to outperform expectations in the coming quarters.
Sources: The Hindu BusinessLine, Rediff Money, Analytics Insight, EY Economy Watch, Zee Business
