India's industrial output growth moderated to 6.7% in September, a decline from a revised 7.8% in August, as a downturn in mining countered robust performance in the manufacturing and electricity sectors.
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Manufacturing continued to be the primary driver of industrial growth, propelled by electrical equipment and motor vehicles. The electricity and gas supply sector also saw strong growth, thanks to higher temperatures and a below-average monsoon. In contrast, mining and quarrying experienced persistent declines, contracting by 6.2%, an increase from a 4.6% drop in August. Mining has contracted in eight of the last nine months.
Investment-led production supported industrial activity, indicating that growth is extending beyond consumer demand. Manufacturing registered a 7.6% increase year-over-year, down from 8.6% in the previous month. Notably, the electrical equipment sector grew by 33.9%, while rubber and plastics products increased by 19.9%, and motor vehicles and trailers expanded by 19.0%. Electricity and gas supply rose by 11.2%. Intermediate goods saw a 12.2% growth, and capital goods increased by 10.4%.
Going forward, industrial production is expected to continue its growth trajectory, primarily fueled by manufacturing and investment, although ongoing weakness in mining and potential higher input costs amid geopolitical tensions and elevated energy prices present risks to this outlook. The crucial question remains whether the manufacturing sector can maintain its momentum to offset disturbances in other industrial areas.