India's Industrial Growth Expected to Slow to 6% in September 2026

India's industrial production growth is anticipated to decrease to 6% in September 2026, down from 8% in August, primarily due to a significant decline in capital goods output and a more pronounced contraction in mining activities, according to a report by Union Bank of India. This slowdown is projected despite robust indicators in other areas of economic activity, such as vehicle sales and infrastructure-related goods.

The bank's report highlights that while electricity generation is expected to maintain its strong performance, with growth projected to rise to 15.6% in September from 12.3% in August, manufacturing and consumer durables are likely to experience diminished momentum. Manufacturing growth is estimated to ease to 6.3%, compared to 9% in the previous month, and consumer durables output is forecasted to decline to 3.1% from 11.1% in August.

Capital goods, an important indicator of investment-related industrial activity, are expected to show the sharpest slowdown, with growth predicted at 2.2% in September, down from 16.9% the month before. Mining output is also under pressure, with production expected to contract by 8%, following a 5.6% decline in August.

Despite these challenges, high-frequency indicators reflect continued strength in the economy. Two-wheeler sales increased by 33.4% year-on-year in September, while passenger vehicle sales rose by 23.3%. Additionally, infrastructure and construction goods are projected to show improvement, with output expected to increase by 7.8% in September from 6.4% in August.

The report emphasizes that public investment and a rebound in private capital expenditure could bolster industrial activity amidst the slowdown in some sectors. However, it also cautions that risks such as a weak monsoon and cost-push price spikes may affect rural demand and overall economic performance. The impact of global uncertainties and prolonged supply disruptions could further challenge the availability of essential inputs, potentially dampening manufacturing output.

Official data from the Index of Industrial Production (IIP) is set to be released on October 28, providing a clearer picture of industrial performance for September 2026.