Research Report

The year-on-year (YoY) expansion in the Index of Industrial Production series (IIP) accelerated to 8.0% in August 2026 (+4.7% in August 2025) from the upwardly revised 7.4% in July 2026 (+5.4% in July 2025), and exceeded ICRA’s estimate of 6.0% for the month. This was driven by electricity generation (to 27-month high +13.3% in August 2026 from +9.3% in July) amid healthy demand owing to deficient rainfall in the month, and a strong performance of the manufacturing sector (to +9.0% from +8.2%) partly aided by the low base related to inventory recalibration in the year-ago month ahead of the implementation of GST rate cuts.

• Only two of the six use-based segments, namely consumer non-durables and intermediate goods, witnessed an uptick in their YoY performance in August 2026 compared to July 2026.
• IIP growth has averaged at 7.7% in July-August 2026, up from 6.2% in Q1 FY2027, suggesting that industrial volume growth has remained strong in these months, which should partly offset the likely impact of margin pressure stemming from the renewed surge in global commodity prices, on the Q2 GDP growth.